53037 Information Memorandum IF3 - M&G Investments · 2017. 9. 25. · The contact details of the...

Information memorandum

For Singapore investors only.

To be read in conjunction with the Prospectus of the Company.

Important information for Singapore

investors investing in the Sub-Funds

The offer or invitation to subscribe for or purchase shares

in the Sub-Funds (the “Shares”), which is the subject

of this Information Memorandum, is an exempt offer

made only: (i) to “institutional investors” pursuant to

Section 304 of the Securities and Futures Act, Chapter

289 of Singapore (the “Act”), (ii) to “relevant persons”

pursuant to Section 305(1) of the Act, (iii) to persons

who meet the requirements of an offer made pursuant

to Section 305(2) of the Act, or (iv) pursuant to, and

in accordance with the conditions of, other applicable

exemption provisions of the Act.

No exempt offer of the Shares for subscription or

purchase (or invitation to subscribe for or purchase

the Shares) may be made, and no document or other

material (including this Information Memorandum)

relating to the exempt offer of Shares may be circulated

or distributed, whether directly or indirectly, to any

person in Singapore except in accordance with the

restrictions and conditions under the Act. By subscribing

for Shares pursuant to the exempt offer under this

Information Memorandum, you are required to comply

with restrictions and conditions under the Act in relation

to your offer, holding and subsequent transfer of Shares.

The Sub-Funds are not authorised or recognised by

the Monetary Authority of Singapore (“MAS”) and the

Shares are not allowed to be offered to the retail public

in Singapore. Each Sub-Fund is a restricted scheme

under the Sixth Schedule to the Securities and Futures

(Offers of Investments) (Collective Investment Schemes)

Regulations of Singapore.

This Information Memorandum is not a prospectus as

defined in the Act and accordingly, statutory liability

under the Act in relation to the content of prospectuses

does not apply. The MAS assumes no responsibility for

the contents of this Information Memorandum.

You should consider carefully whether the investment is

suitable for you and whether you are permitted (under

the Act, and any laws or regulations that are applicable

to you) to make an investment in the Shares. If in doubt,

you should consult your legal or professional advisor.

The Sub-Funds are each a sub-fund in an umbrella

fund, M&G Investment Funds (3) (the “Company”). The

Company is an open-ended investment company with

variable capital incorporated in England and Wales.

The business address of the Company is Laurence

Pountney Hill, London EC4R 0HH, United Kingdom.

The Company is authorised by the Financial Conduct

Authority (the “FCA”) of the United Kingdom under the

Open-Ended Investment Companies Regulations 2001

and is regulated by the FCA as a UCITS scheme.

The authorised corporate director of the Company,

M&G Securities Limited (the “ACD”), is responsible for

managing and administering the Company’s affairs in

accordance with the applicable laws and regulations.

The ACD is a private company limited by shares

incorporated in England and Wales and is authorised

and regulated by the FCA.

The depositary, National Westminster Bank Plc (the

“Depositary”), is responsible for the safekeeping of the

property of the Company entrusted to it. The Depositary

is a public limited company incorporated in England and

Wales and is authorised by the Prudential Regulation

Authority (the “PRA”) and regulated by the FCA and

the PRA.

Relating to the following sub-fund of M&G Investment Funds (3) (the “Company”)

• M&G European Corporate Bond Fund

• M&G European High Yield Bond Fund

• M&G Emerging Markets Bond Fund

• M&G Smaller Companies Fund

• M&G Global Government Bond Fund

(each a “Sub-Fund” and collectively, the “Sub-Funds”)

The contact details of the regulators are as follows:

FCA

25 The North Colonnade

Canary Wharf, London E14 5HS United Kingdom

Telephone no: +44 (0) 20 7066 1000

PRA

20 Moorgate

London, EC2R 6DA United Kingdom

Telephone no: +44 (0)20 7601 4444

Please note that this Information memorandum

incorporates the attached Prospectus of the Company.

Investors should refer to such attachment for particulars

on (i) the risks of subscribing for or purchasing the

Shares in the Sub-Funds, (ii) the conditions, limits and

gating structures for redemption of the Shares, (iii) the

fees and charges that are payable by investors and

payable out of the Sub-Funds, (iv) past performance

of the Sub-Funds (where available), and (v) where the

annual reports and half-yearly reports of the Sub-Funds

may be obtained.

Investors should also refer to the attached Prospectus

for the investment objective and focus in relation to the

Sub-Funds. Details of the investment approach of each

Sub-Fund are set out below:

M&G European Corporate Bond Fund

The M&G European Corporate Bond Fund aims to

maximise total returns through investing in mainly

European investment grade corporate bonds. The

fund also has the flexibility to invest in high yield or

government bonds. The fund manager believes returns

are driven by a combination of macroeconomic, asset,

sector, geography and stock-level factors. A dynamic

investment approach is followed, allowing the fund

manager to change the blend of duration and credit

exposure based on his outlook.

The fund has no benchmark, which allows for a

flexible and high-conviction investment approach. A

high level of diversification, across individual issuers,

sectors and geographies is an essential part of the

investment process.

An in-house team of independent credit analysts assists

the fund manager in individual credit selection along

with the monitoring of names held by the fund.

M&G European High Yield Bond Fund

The M&G European High Yield Bond Fund focuses

on ongoing proprietary research rather than relying

on external credit ratings. Emphasis is placed upon

investigating the ability of a company or government

to meet its interest payments, especially during

unfavourable economic conditions. Credit risk is

constantly monitored and typically spread across a

variety of countries and industrial sectors. The fund’s

exposure to higher yielding debt instruments may be

gained through the use of derivatives. Exposure to

European currencies (mainly the euro) is an integral

part of the management approach, and fluctuations in

the exchange rates of these currencies against sterling

are likely to play a significant role in determining total

returns for UK-based investors.

M&G Emerging Markets Bond Fund

The M&G Emerging Markets Bond Fund aims to

maximise total returns by investing mainly in emerging

market sovereign and corporate debt. The investment

approach begins with a top-down assessment of

macroeconomic factors such as global risk appetite

and structural global growth catalysts. On a regional

and country-specific level, factors such as monetary

and fiscal policies, capital flows, and political and

regulatory environments will be assessed. The result

of this analysis will help inform the fund’s country and

currency allocations and its duration. Individual credit

selection is determined by a thorough credit analysis

and an assessment of valuations. Both macroeconomic

and stock-specific analysis is undertaken in close

conjunction with the deputy fund manager and the

internal credit analysts. The fund is diversified by

investing in a range of assets across global emerging

markets and is unconstrained by a benchmark with a

fully flexible strategy.

M&G Smaller Companies Fund

The fund invests in companies from the bottom 10%,

by value, of the UK stockmarket. The investment team

takes a bottom-up approach to stockpicking and aims

to construct a well-diversified portfolio of between 70

and 90 stocks. They adopt a long-term perspective with

particular focus placed on three specific criteria: scarce

assets, growth drivers and valuation.

Scarce assets are the key elements that enable

companies to generate sustainable, attractive returns.

Depending on the nature of the business, scarce assets

may be tangible, intangible or organisational.

JAN 15 / 53037

Growth drivers provide companies with the opportunity

to reinvest their returns profitably. They may include

shifts in the commercial or regulatory environment,

changes in customer behaviour or expansion into

new markets.

Valuation is critical for differentiating between great

companies and great investments. A comprehensive but

flexible approach to company valuation is undertaken;

a wide range of metrics are monitored to ensure an

appropriate valuation for each individual company.

The quality of company management is central to the

successful exploitation of scarce assets and growth

drivers. Company meetings are therefore a crucial

component of the investment process.

M&G Global Government Bond Fund

The M&G Global Government Bond Fund aims to

maximise total return (the combination of income

and growth of capital) through investing mainly in

investment grade government debt securities on

a global basis. It seeks to outperform the Barclays

Global Treasury Index net of fees over a one-to-three

year horizon, taking active country, yield curve and

currency positions to generate returns. The investment

approach begins with a top-down assessment of the

macroeconomic environment, including the likely path

of growth, inflation and interest rates. The results of this

analysis help the manager to decide the fund’s duration

positioning and its allocation to the various country

markets. The fund invests primarily in investment grade

government bonds on a global basis, including the UK. It

may allocate up to 30% of its assets to non-investment

grade government debt securities. The fund may also

use derivative instruments for both investment purposes

and efficient portfolio management.

Investors should note that only Shares in the

Sub-Funds are being offered pursuant to this

Information Memorandum. This Information

Memorandum is not and should not be construed

as making an offer in Singapore of shares in any

other sub-fund of the Company.

Issued by M&G Securities Limited 10 November 2014

M&G Investment Funds (3)

ProspectusM&G Investment Funds (3)

2

This document constitutes the Prospectus for M&G INVESTMENT FUNDS

(3) (the ‘Company’) which has been prepared in accordance with the Open-

Ended Investment Companies Regulations 2001 and the rules contained in

the Collective Investment Schemes Sourcebook published by the FCA as

part of its Handbook of Rules and Guidance.

The Prospectus is dated and is valid as at 10 November 2014.

Copies of this Prospectus have been sent to the Financial Conduct Authority

and National Westminster Bank Plc as Depositary.

The Prospectus is based on information, law and practice at the date hereof

but where it refers to any statutory provision or regulation this includes any

modification or re-enactment that has been made. The Company is not

bound by any out of date prospectus when it has issued a new prospectus

and potential investors should check that they have the most recently

published prospectus.

M&G Securities Limited, the Authorised Corporate Director of the Company,

is the person responsible for the information contained in this Prospectus. To

the best of its knowledge and belief (having taken all reasonable care to

ensure that such is the case) the information contained herein does not

contain any untrue or misleading statement or omit any matters required by

Regulations to be included in it. M&G Securities Limited accepts

responsibility accordingly. No person has been authorised by the Company

to give any information or to make any representations in connection with the

offering of Shares other than those contained in the Prospectus and, if given

or made, such information or representations must not be relied on as having

been made by the Company. The delivery of this Prospectus (whether or not

accompanied by any reports) or the issue of Shares shall not, under any

circumstances, create any implication that the affairs of the Company have

not changed since the date hereof.

The distribution of this Prospectus and the offering of Shares in certain

jurisdictions may be restricted. Persons into whose possession this

Prospectus comes are required by the Company to inform themselves about

and to observe any such restrictions. This Prospectus does not constitute an

offer or solicitation by anyone in any jurisdiction in which such offer or

solicitation is not authorised or to any person to whom it is unlawful to make

such offer or solicitation.

Warning: the contents of this document have not been reviewed

by any regulatory authority in Hong Kong. You are advised to

exercise caution in relation to this offer. If you are in any doubt

about the contents of this document you should obtain

independent professional advice. In particular, no interest in the

Company will be issued to any person other than the person to whom this

document is addressed. In addition, (a) no offer or invitation to subscribe for

Shares in the Company may be made to the public in Hong Kong; and (b)

this document has not been approved by the Securities and Futures

Commission in Hong Kong or any other regulatory authority in Hong Kong

and accordingly interests in the Company may not be offered or sold in Hong

Kong by means of this document, other than in circumstances which do not

constitute an offer to the public for the purposes of the Hong Kong

Companies Ordinance and the Hong Kong Securities and Futures

Ordinance, as amended from time to time. Shares in the Company are not

listed on any investment exchange.

Potential investors should not treat the contents of this Prospectus as advice

relating to legal, taxation, investment or any other matters and are

recommended to consult their own professional advisers concerning the

acquisition, holding or disposal of Shares.

The provisions of the Instrument of Incorporation are binding on each of its

Shareholders (who are taken to have notice of them).

This Prospectus has been approved for the purpose of section 21(1) of the

Financial Services and Markets Act 2000 by M&G Securities Limited.

The Depositary is not a person responsible for the information contained in

this Prospectus and accordingly does not accept any responsibility therefore

under the Regulations or otherwise.

If you are in any doubt about the contents of this Prospectus you should

consult your professional adviser.

Prospectus


IF3/10152014/ENG/r01

3

Definitions 4

Definitions 5

1 The Company 6

2 Company structure 6

3 Shares 6

4 Management and Administration 7

5 The Depositary 8

6 The Investment Manager 8

7 Administrator and Registrar 8

8 The Auditor 8

9 Register of Shareholders 8

10 Fund Accounting and Pricing 8

11 Collateral Management 8

12 Buying, selling and switching shares 8

13 Buying shares 9

14 Selling shares 9

15 Switching and converting shares 10

16 Dealing charges 11

17 Other dealing information 11

18 Stamp Duty Reserve Tax (‘SDRT’) 12

19 Money laundering 12

20 Restrictions on dealing 12

21 Suspension of dealings in the Company 13

22 Governing law 13

23 Valuation of the Company 13

24 Calculation of the Net Asset Value 13

25 Price per share in each Sub-fund and each class 14

26 Pricing basis 14

27 Publication of prices 14

28 Risk factors 14

29 Charges and Expenses 14

30 Stock lending 16

31 Shareholder meetings and voting rights 16

32 Taxation 17

33 Income equalisation 18

34 Winding up of the Company or a Sub-fund of the Company 18

35 General Information 19

36 Complaints 21

37 Tax Reporting 21

38 Marketing outside the UK 21

39 Markets for the Sub-funds 21

40 Genuine diversity of ownership 21

41 Risk factors 22

APPENDIX 1 - 28

DETAILS OF THE SUB-FUNDS OF M&G INVESTMENT FUNDS (3)

APPENDIX 2 - 41

INVESTMENT MANAGEMENT AND BORROWING POWERS OF THE

COMPANY

APPENDIX 3 - 51

ELIGIBLE MARKETS

APPENDIX 4 - 52

INFORMATION FOR NON-UK INVESTORS

APPENDIX 4 - 53


APPENDIX 4 - 54


APPENDIX 5 – 61

PERFORMANCE BAR CHARTS

APPENDIX 5a – 63

EURO PERFORMANCE BAR CHARTS

APPENDIX 5b – 64

U.S. DOLLAR PERFORMANCE BAR CHARTS

APPENDIX 5c - 65

SWISS FRANC PERFORMANCE BAR CHARTS

Directory 66

Contents


IF3/10152014/ENG/r01

UK Customer Helpline: 0800 390 390

Investors in Euro Share Classes should see Appendix 4 for contact details

4

Accumulation Share: a share in the Company in respect of which income

allocated thereto is credited periodically to capital pursuant to the

Regulations;

ACD: M&G Securities Limited, the Authorised Corporate Director of the

Company;

ACD Agreement: The agreement to be entered into between the Company

and the ACD authorising the ACD to manage the affairs of the Company;

Approved Bank in relation to a bank account opened by the Company:

(a) if the account is opened at a branch in the United Kingdom;

(i) the Bank of England; or

(ii) the central bank of a member state of the OECD; or

(iii) a bank or a building society; or

(iv) a bank which is supervised by the central bank or other

banking regulator of a member state of the OECD; or

(b) if the account is opened elsewhere:

(i) a bank in (a); or

(ii) a credit institution established in an EEA State other than in

the United Kingdom and duly authorised by the relevant

Home State Regulator; or

(iii) a bank which is regulated in the Isle of Man or the Channel

Islands; or

(c) a bank supervised by the South African Reserve Bank; or

(d) any other bank that:

(i) is subject to regulation by a national banking regulator;

(ii) is required to provide audited accounts;

(iii) has minimum net assets of £5 million (or its equivalent in any other

currency at the relevant time) and has a surplus revenue over expenditure for

the last two financial years; and

(iv) has an annual audit report which is not materially qualified.

Base Currency: in relation to the Company the base currency is pounds

sterling;

BCD Credit Institution: a credit institution under the Banking Consolidation

Directive;

Class or Classes: in relation to Shares, means (according to the context) all of

the Shares related to a single Sub-fund or a particular class or classes of

Share related to a single Sub-fund;

Client Account: A bank account held by us in accordance with the FCA

Handbook of Rules and Guidance;

COLL: refers to the appropriate chapter or rule in the COLL Sourcebook

issued by the FCA as amended or re-enacted from time to time;

Company:M&G Investment Funds (3);

Dealing Day: Monday to Friday except for bank holidays in England and

Wales and other days at the ACD’s discretion;

Depositary:National Westminster Bank Plc, the depositary of the Company;

Efficient Portfolio Management: means the use of techniques and

instruments which relate to transferable securities and approved money-

market instruments and which fulfil the following criteria:

(a) they are economically appropriate in that they are realised in a cost

effective way; and

(b) they are entered into for one or more of the following specific aims:

- reduction of risk;

- reduction of cost;

- generation of additional capital or income for the scheme with a risk level

which is consistent with the risk profile of the scheme and the risk

diversification rules laid down in COLL

Eligible Institution: one of certain eligible institutions being a BCD credit

institution authorised by its home state regulator or an Investment Firm

authorised by its home state regulator as defined in the glossary of

definitions in the FCA Handbook;

fraction: a smaller denomination share (on the basis that one thousand

smaller denomination shares make one larger denomination share);

FCA: the Financial Conduct Authority;

Instrument of Incorporation: the instrument of incorporation of the Company

as amended from time to time;

Intermediate Unitholder: a firm whose name is entered in the register of a

Sub-fund, or which holds Shares indirectly through a third party acting as a

nominee, and which:

(a) is not the beneficial owner of the relevant Share; and

(b) does not manage investments on behalf of the relevant beneficial owner

of the Share; or

(c) does not act as a depositary of a collective investment scheme or on

behalf of such a depositary in connection with its role in holding property

subject to the scheme;

Investment Manager: one or more of the companies appointed as the

investment manager by the ACD shown in section 6, as the context may

require;

Investment Firm: an investment firm that provides investment services as

defined in the glossary of definitions in the FCA handbook;

M&G OEIC: M&G Investment Funds (1), M&G Investment Funds (2), M&G

Investment Funds (3), M&G Investment Funds (4), M&G Investment Funds

(5), M&G Investment Funds (7), M&G Investment Funds (8), M&G

Investment Funds (9), M&G Investment Funds (10), M&G Investment Funds

(11), M&G Investment Funds (12), M&G Investment Funds (14) M&G

Global Dividend Fund, M&G Dynamic Allocation Fund, M&G Global Macro

Bond Fund, M&G Optimal Income Fund, M&G Property Portfolio, M&G

Strategic Corporate Bond Fund

or any other open-ended investment company with variable capital

incorporated in England and Wales and managed by the ACD;

mainly: within an investment objective, an amount greater than 70%;

Member State: those countries which are members of the European Union

or the European Economic Area at any given time;

Net Asset Value or NAV: the value of the scheme property of the Company

(or of any Sub-fund as the context requires) less the liabilities of the

Company (or of the Sub-fund concerned) as calculated in accordance with

the Company’s Instrument of Incorporation;

Primarily: within an investment objective, at least 80% of the portfolio;

predominantly: within an investment objective, at least 80% of the portfolio;

Reference Currency: the currency on which a fund bases its investment

strategy where different from the Base Currency or the Valuation Currency

of the Sub-fund;

the Regulations: the Open-Ended Investment Companies Regulations 2001

and the rules contained in the Collective Investment Schemes Sourcebook

published by the FCA as part of its Handbook of Rules and Guidance;

SDRT: Stamp Duty Reserve Tax;

scheme property: the property of the Company to be given to the Depositary

for safekeeping, as required by the Regulations;

Share or Shares: a share or shares in the Company (including larger

denomination Shares and fractions), or where appropriate a share or shares

in any other M&G OEIC;

Shareholder: a holder of registered or bearer shares in the Company;

Sub-fund or Sub-fund: a Sub-fund of the Company (bearing part of the

scheme property of the Company which is pooled separately) and to which

specific assets and liabilities of the Company may be allocated and which is

invested in accordance with the investment objective applicable to that Sub-

fund;

Definitions


IF3/10152014/ENG/r01

5

switch: the exchange of Shares of one Class or Sub-fund for Shares of

another Class or Sub-fund of any M&G OEIC;

Valuation Currency: the currency in which a fund is valued, being the currency

noted for each fund in Appendices 1 and 4;

XD date: the XD (or Ex-Dividend) date is the date on which the income is

removed from the price of an Income Share pending the payment of a

distribution.

Definitions


IF3/10152014/ENG/r01

6

Prospectus


IF3/10152014/ENG/r01

Operating Structure and Details

1 The Company

1.1 M&G INVESTMENT FUNDS (3) is an open-ended investment

company with variable capital, incorporated in England and Wales

under registered number IC 117 and authorised by the Financial

Conduct Authority with effect from 8 August 2001. The Company

has been established for an unlimited duration.

The Company has been certified by the FCA as complying with the

conditions necessary for it to enjoy the rights conferred by the EC

Directive on undertakings for collective investment in transferable

securities (‘UCITS’).

1.2 The Head Office of the Company is at Laurence Pountney Hill,

London EC4R 0HH and is also the address of the place in the

United Kingdom for service on the Company of notices or other

documents required or authorised to be served on it. The Company

does not have any interest in immovable property or any tangible

moveable property.

1.3 The Base Currency of the Company is pounds sterling.

1.4 The maximum share capital of the Company is currently

£250,000,000,000 and the minimum is £100. Shares in the

Company have no par value and therefore the share capital of the

Company at all times equals the Company’s current Net Asset

Value.

1.5 Shareholders in the Company are not liable for the debts of the

Company (see also section 41- Risk Factors).

1.6 The Company has been established as an ‘umbrella company’ (as

defined in the Regulations) and therefore different Sub-funds may

be formed by the ACD, subject to approval from the FCA. On the

establishment of a new Sub-fund or share class an updated

prospectus will be prepared setting out the relevant information

concerning the new Sub-fund or share class.

2 Company structure

2.1 The Company is an umbrella company. The assets of each Sub-

fund are treated as separate from those of every other Sub-fund

and will be invested in accordance with that Sub-fund’s own

investment objective and policy.

2.2 At present, there are 9 Sub-funds, which are available for

investment:

M&G Corporate Bond Fund,

M&G Dividend Fund,

M&G Emerging Markets Bond Fund,

M&G European Corporate Bond Fund,

M&G European High Yield Bond Fund,

M&G Fund of Investment Trust Shares,

M&G Global Government Bond Fund,

M&G Recovery Fund,

M&G Smaller Companies Fund.

These Sub-funds are all UCITS schemes within the meaning of the

Regulations.

2.3 The investment objective, investment policy and other details of

each Sub-fund are set out in Appendices 1 and 4. The investment

and borrowing powers under the Regulations applicable to each

Sub-fund are set out in Appendix 2 and the eligible securities and

derivatives markets on which the Sub-funds can invest are set out

in Appendix 3.

2.4 When there is more than one Sub-fund in issue, each Sub-fund has

a specific portfolio of assets and investments to which each Sub-

fund’s assets and liabilities are attributable and investors should

view each Sub-fund as a separate investment entity.

2.5 The Sub-funds are segregated portfolios of assets and,

accordingly, the assets of a Sub-fund belong exclusively to that

Sub-fund and shall not be made available to discharge (directly or

indirectly) the liabilities of, or claims against, any other person or

body, including the Company or any other Sub-fund and shall not be

available for any such purpose.

2.6 Shareholders in the Company are not liable for the debts of the

Company or any Sub-fund in the Company (see also section 41-

Risk Factors).

2.7 Subject to the above, each Sub-fund will be charged with the

liabilities, expenses, costs and charges of the Company attributable

to that Sub-fund and within the Sub-funds charges will be allocated

between share classes in accordance with the terms of issue of

those share classes.

2.8 Any assets, liabilities, expenses, costs or charges not attributable to

a particular Sub-fund may be allocated by the ACD in a manner

which is fair to Shareholders as a whole but they will normally be

allocated to all Sub-funds pro rata to the value of the net assets of

the relevant Sub-funds.

3 Shares

3.1 Classes of Share within the Sub-funds

3.1.1 Several share classes may be issued in respect of a Sub-

fund. The Instrument of Incorporation allows gross income

and gross accumulation Shares to be issued as well as net

income and net accumulation Shares. Net Shares are

Shares in respect of which income allocated to them is

distributed periodically to the relevant Shareholders (in the

case of income Shares) or credited periodically to capital

(in the case of accumulation Shares), in either case in

accordance with relevant tax law net of any tax deducted

or accounted for by the Company. Gross Shares are

income or accumulation Shares where, in accordance with

relevant tax law, distribution or allocation of income is

made without any UK tax being deducted or accounted for

by the Company. The share classes in issue, or available

for issue, for each Sub-fund are shown in Appendices 1

and 4.

3.1.2 Any Sub-fund may make available such further classes of

Share as the ACD may decide.

3.1.3 Shareholders should note that the ACD issues hedged

Share Classes. Share class hedging activity does not form

part of the investment strategy of a Sub-fund but is

designed to reduce exchange rate fluctuations between the

currency of the hedged Share Class and the Valuation

Currency or Reference Currency of the Sub-fund. All costs

associated with operating hedging transactions for these

Share Classes will be borne by Shareholders of these

Share Classes.

Forward currency contracts, or other instruments that may

achieve a similar result, will be used to hedge the total

return (capital and revenue) of Share Classes which are

not denominated in the Sub-fund’s Valuation Currency or

Reference Currency thereby reducing exposure to

movements in rates of currency exchange between the

currency of the Share Classes and the Valuation Currency

or Reference Currency of the Sub-fund.

The hedging position will be reviewed on each Dealing Day

and adjusted when there is a material change, for example,

following asset allocation decisions by the Investment

Manager.

7

The Reference Currency of the M&G European Corporate

Bond Fund and the M&G European High Yield Bond Fund

is the Euro. The Reference Currency for M&G Emerging

Markets Bond Fund is the U.S. Dollar.

3.1.4 Holders of Income Shares are entitled to be paid the

income attributed to such Shares on the relevant interim

and annual allocation dates net of tax. The price of such

Shares immediately after the end of the relevant

accounting period reduces to reflect these allocations of

income.

3.1.5 Holders of Accumulation Shares are not entitled to be paid

the income attributable to such Shares but that income is

automatically transferred to (and retained as part of) the

capital assets of the relevant Sub-fund immediately after

the relevant interim and / or annual accounting dates. The

price of such Shares continues to reflect this retention of

the income entitlement, which will be transferred after

deduction of applicable tax.

3.1.6 Where a Sub-fund has different classes of Share available,

each class may attract different charges and expenses and

so monies may be deducted from classes in unequal

proportions. For this and like reasons, the proportionate

interests of the classes within a Sub-fund will vary from

time to time.

3.1.7 When different Sub-funds are available, Shareholders will

be entitled (subject to certain restrictions) to switch all or

some of their Shares in a Sub-fund for Shares within a

different Sub-fund or a different M&G OEIC. Details of this

switching facility and the restrictions are set out in

paragraph 15 of this document.

3.1.8 Holders of Income Shares may convert all or some of their

Shares to Accumulation Shares of the same Class in the

same Sub-fund, and holders of Accumulation Shares may

convert all or some of their Shares to Income Shares of the

same Class in the same Sub-fund. Details of this

conversion facility are set out in paragraph 15.9 of this

document.

3.1.9 Sterling Class ‘C’ Shares are available only to a company

which the ACD deems to be an associate company or to

other collective investment schemes managed by the ACD

or a company which the ACD deems to be an associate

company.

3.1.10 Sterling Class R Shares are available only to Intermediate

Unitholders or where the deal has been arranged by a

financial adviser.

3.1.11 Not all share classes listed in Appendices 1 and 4

may currently be in issue. Please see www.mandg.com/

classesinissue for details of which share classes are

currently being issued by which Sub-funds.

3.1.12 Where a Sub-fund does not currently issue a share class

listed for it in Appendices 1 and 4, the ACD may be willing

to arrange for it to be issued once it has secured

commitments from potential customers to purchase no

less than a total of £20million-worth of that share class.

The ACD will require at least eight-weeks’ notice before

being able to issue such a share class.

4 Management and Administration

4.1 Authorised Corporate Director

4.1.1 The Authorised Corporate Director of the Company is

M&G Securities Limited which is a private company limited

by shares incorporated in England and Wales under the

Companies Acts 1862 to 1900 on 12 November 1906. The

ultimate holding company of the ACD is Prudential plc, a

company incorporated in England and Wales.

4.1.2 Registered Office and Head Office:

Laurence Pountney Hill, London EC4R 0HH.

Share Capital:

Authorised £100,000

Issued and paid-up £100,000

Directors:

Mr Gary Cotton,

Mr Martin Lewis,

Mr Graham MacDowall,

Mr Laurence Mumford,

Mr William Nott,

Philip Jelfs.

All of the directors have significant business activities

which are not connected to those of the ACD but of other

companies within the M&G Group.

4.1.3 The ACD is responsible for managing and administering

the Company’s affairs in compliance with the Regulations.

Other companies for which the ACD has these

responsibilities are M&G Investment Funds (1), M&G

Investment Funds (2), M&G Investment Funds (4), M&G




Investment Funds (12), M&G Global Dividend Fund, M&G

Dynamic Allocation Fund, M&G Global Macro Bond Fund,

M&G Optimal Income Fund, M&G Property Portfolio, M&G

Feeder of Property Portfolio and M&G Strategic Corporate

Bond Fund. The ACD is also the Manager of the M&G

Feeder of Property Portfolio and the managing agent for

The Equities Investment Fund for Charities, The Charibond

Charities Fixed Interest Common Investment Fund, and

The National Association of Almshouses Common

Investment Fund.

4.2 Terms of Appointment

4.2.1 The ACD Agreement provides that the appointment of the

ACD is for an initial period of three years and thereafter

may be terminated upon twelve months written notice by

either the ACD or the Company, although in certain

circumstances the agreement may be terminated forthwith

by notice in writing by the ACD to the Company or the

Depositary, or by the Depositary or the Company to the

ACD. The ACD cannot be replaced until the FCA has

approved the appointment of another director in place of

the retiring ACD. The ACD Agreement may be inspected at

the offices of the ACD during normal business hours by

any Shareholder or any Shareholder’s duly authorised

agent. Alternatively, a copy of the ACD Agreement may be

sent to any Shareholder at his request within 10 days of the

Company’s receipt of such request.

4.2.2 The ACD is entitled to its pro rata fees and expenses to the

date of termination and any additional expenses

necessarily realised in settling or realising any outstanding

obligations. No compensation for loss of office is provided

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for in the agreement. The ACD Agreement provides

indemnities by the Company to the ACD other than for

matters arising by reason of the ACD’s negligence, default,

breach of duty or breach of trust in the performance of the

ACD’s duties and obligations.

4.2.3 Where the ACD deals as principal in the Shares of Sub-

funds, any profits or losses arising from such transactions

shall accrue to the ACD and not to the Sub-fund. The ACD

is under no obligation to account to the Depositary or the

Shareholders for any profit it makes on the issue or re-

issue of Shares or cancellation of Shares which it has

redeemed. The fees to which the ACD is entitled are set

out in paragraph 30.

5 The Depositary

National Westminster Bank Plc is the Depositary of the Company.

The Depositary is a public limited company incorporated in England

and Wales. Subject to the Regulations the Depositary is

responsible for the safekeeping of the property of the Company

entrusted to it and has a duty to take reasonable care to ensure that

the Company is managed in accordance with the provisions of the

Regulations relating to the pricing of, and dealing in, Shares of the

Company and to the allocation of the income of the Company. The

appointment of the Depositary was made under an agreement

between the Company, the ACD and the Depositary.

5.1 Registered Office:

135 Bishopsgate, London, EC2M 3UR

5.2 Head Office:

135 Bishopsgate, London, EC2M 3UR

5.3 Ultimate Holding Company:

The Royal Bank of Scotland Group plc.

5.4 Principal Business Activity:

The principal business activity of the Depositary is banking.

5.5 Terms of Appointment:

5.5.1 The Depositary provides its services under the terms of a

depositary agreement between the Company and the

Depositary (the ‘Depositary Agreement’). Subject to the

Regulations, the Depositary has full power under the

Depositary Agreement to delegate (and authorise its sub-

delegates to sub-delegate) all or any part of its duties as

Depositary.

5.5.2 The Depositary Agreement may be terminated by six

months notice given by either the Company or the

Depositary, provided that the Depositary may not

voluntarily retire except on the appointment of a new

Depositary.

5.5.3 The Depositary Agreement contains indemnities by the

Company in favour of the Depositary against (other than in

certain circumstances) any liability incurred by the

Depositary as a consequence of its safe keeping of any of

the scheme property or incurred by it as a consequence of

the safe keeping of any of the scheme property by anyone

retained by it to assist it to perform its functions of the safe

keeping of the scheme property and also (in certain

circumstances) exempts the Depositary from liability.

5.5.4 The Depositary is entitled to the fees, charges and

expenses detailed under ‘Depositary’s Fee, Charges and

Expenses’ in paragraph 32.

5.5.5 The Depositary has appointed State Street Bank and Trust

Company to assist the Depositary in performing its

functions of custodian of the documents of title or

documents evidencing title to the property of the Company.

The relevant arrangements prohibit State Street Bank and

Trust Company as such custodian from releasing the

documents into the possession of a third party without the

consent of the Depositary. The Depositary has appointed

International Financial Data Services (UK) Limited in its

capacity as registrar to assist the Depositary in performing

its functions in relation to the distribution of income.

6 The Investment Manager

The ACD has appointed M&G Investment Management Limited

(“MAGIM”) to provide investment management and advisory

services in respect of the Sub-funds identified in Appendices 1 and

4. The Investment Manager has authority to make decisions on

behalf of the Company and the ACD in respect of the acquisition

and disposal of property at any time comprising the relevant Sub-

fund and to advise in respect of the rights associated with the

holding of such property. The Investment Manager has been

appointed under an agreement between the ACD and the

Investment Manager whereby the ACD accepts responsibility for all

these services provided by the Investment Manager to the

Company. The investment management agreement may be

terminated on six months written notice by the Investment Manager

or the ACD, or immediately by the ACD if it decides that it is in the

best interests of Shareholders to do so.

The Investment Manager’s principal activity is acting as an

investment manager and it is an Associate of the ACD by being a

subsidiary of Prudential plc.

7 Administrator and Registrar

The ACD employs International Financial Data Services (UK)

Limited to provide certain administration services and act as

registrar to the Company.

8 The Auditor

The auditor of the Company is Ernst & Young LLP of 10 George

Street, Edinburgh, EH2 2DZ.

9 Register of Shareholders

The Register of Shareholders is maintained by IFDS at its office at

IFDS House, St Nicholas Lane, Basildon, Essex SS15 5FS and

may be inspected at that address during normal business hours by

any Shareholder or any Shareholder’s duly authorised agent.

10 Fund Accounting and Pricing

The ACD has appointed State Street Bank and Trust Company to

undertake the fund accounting and pricing functions on behalf of

the Company.

11 Collateral Management

Where the Company enters into OTC derivative transactions,

JPMorgan Chase Bank, N.A. will provide administrative services in

connection with the collateral management functions.

12 Buying, selling and switching shares

The address for postal dealing is P.O.Box 9039, Chelmsford CM99

2XG. Telephone deals can be placed between 8.00 am and 6.00

pm UK time on each Dealing Day (except for Christmas Eve and

New Year’s Eve when the office closes early) for the sale,

redemption and switching of Shares. Deals will be effected at

prices determined at the next valuation point (12.00 noon UK time)

following receipt of the request, i.e. on a forward pricing basis.

Subject to paragraphs 13, 14 and 15, requests may be made by

post, telephone, or any electronic or other means which the ACD

may from time to time determine, either directly or via an authorised

intermediary.

Prices for M&G Investment Funds (3) are calculated every Dealing

Day at the valuation point. Postal deals received at our postal

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dealing address and requests communicated by other means to the

ACD before the valuation point will be dealt with at the price

calculated on that Dealing Day; requests received after the

valuation point will be dealt with at the price calculated on the next

following Dealing Day.

The ACD does not currently permit the transfer of Shares by

electronic means but may do so in the future at its discretion. For

further details please contact the ACD.

13 Buying shares

13.1 Procedure for investors in Sterling Share Classes

(Investors in Euro Share Classes should refer to Appendix

4)

13.1.1 On any given Dealing Day the ACD will be willing to sell

Shares of at least one Class in each Sub-fund. Shares can

be bought as a lump sum investment or by way of a regular

savings plan. Postal applications may be made on

application forms obtained from the ACD. Alternatively,

lump sum investment can be made under approved

circumstances by telephoning M&G’s Customer Dealing

Line 0800 328 3196 between 8.00 am and 6.00 pm UK

time on Dealing Days or by visiting the ACD’s website:

www.mandg.co.uk.

13.1.2 The ACD has the right to reject, on reasonable grounds

relating to the circumstances of the applicant, any

application for Shares in whole or part, and in this event the

ACD will return any money sent, or the balance of such

monies, at the risk of the applicant. The ACD may also

cancel any previously accepted request for the issue of

Shares in the event of either non-payment of the amount

due, including any provision for SDRT, or undue delay in

payment by the applicant, including the non-clearance of

cheques or other documents presented in payment.

Please note that:

* Sterling Class ‘C’ Shares are available only to a

company which the ACD deems to be an associate

company or to other collective investment schemes

managed by the ACD or a company which the ACD

deems to be an associate company; and,

* Sterling Class ‘R’ Shares are available only to

Intermediate Unitholders or where the deal has been

arranged by a financial adviser.

13.1.3 Any subscription monies remaining after a whole number

of Shares has been issued may not be returned to the

applicant. Instead, fractions may be issued in such

circumstances.

13.2 Documentation

13.2.1 A contract note giving details of the Shares purchased and

the price used will be issued by the end of the business day

following the valuation point by reference to which the price

is determined, together with, where appropriate, a notice of

the applicant’s right to cancel.

13.2.2 Payment for Shares purchased by post must accompany

the application; payment for Shares purchased by other

means must be made by no later than four business days

after the valuation point following receipt of the instructions

to purchase.

13.2.3 Currently share certificates will not be issued in respect of

Shares. Ownership of Shares will be evidenced by an

entry on the Company’s Register of Shareholders.

Statements in respect of periodic allocations of income of

each Sub-fund will show the number of Shares held by the

recipient in the Sub-fund in respect of which the allocation

is made. Individual statements of a Shareholder’s Shares

will also be issued at any time on request by the registered

holder (or, when Shares are jointly held, the first named

holder).

13.2.4 The Company has the power to issue bearer Shares but

has no plans at present to do so.

13.3 Minimum subscriptions and holdings

13.3.1 The minimum initial lump sum and regular savings plan

subscriptions for Shares and the minimum holding in the

Sub-funds are set out for each Sub-fund in Appendices 1

and 4. If at any time a Shareholder’s holding is below the

specified minimum, the ACD reserves the right to sell the

Shares and send the proceeds to the Shareholder, or at its

absolute discretion convert the Shares to another Share

Class within the same Sub-fund.

13.4 Holdings of Class ‘R’ Shares

13.4.1 Where a purchase by a Shareholder of Sterling Class ‘R’

Shares has been arranged by a financial adviser the ACD

will maintain a record of that financial adviser linked to their

account with the ACD. If a Shareholder of Class ‘R’ Shares

has their financial adviser removed from their account

(whether at the request of the Shareholder or the financial

adviser, or as a result of the financial adviser no longer

being authorised by the FCA), the ACD reserves the right

at its absolute discretion to switch those Shares to Class ‘A’

Shares within the same Sub-fund. Shareholders should

note that the ongoing charge of Class ‘A’ Shares is greater

than that of Class ‘R’ Shares.

14 Selling shares

14.1 Procedure for investors in Sterling Share Classes


4)

14.1.1 Shareholders have the right to sell Shares back to the ACD

or require that the ACD arranges for the Company to buy

their Shares on any Dealing Day unless the value of

Shares which a Shareholder wishes to sell will mean that

the Shareholder will hold Shares with a value less than the

required minimum holding for the Sub-fund concerned, in

which case the Shareholder may be required to sell the

entire holding.

14.1.2 Requests to sell Shares may be made by post, telephone

or any electronic or other means which the ACD may from

time to time determine, either directly or via an authorised

intermediary; the ACD may require telephonic or electronic

requests to be confirmed in writing.

14.2 Documents the Seller will receive

A contract note giving details of the Shares sold and the price used

will be sent to the selling Shareholder (the first named, in the case

of joint Shareholders) or to an authorised agent not later than the

end of the business day following the valuation point by reference

to which the price is determined. Payment of proceeds will be made

within four business days of the later of:

14.2.1 receipt by the ACD, when required, of sufficient written

instructions duly signed by all the relevant Shareholders

and completed as to the appropriate number of Shares,

together with any other appropriate evidence of title; and

14.2.2 the valuation point following receipt by the ACD of the

request to sell.

14.2.3 The requirement for sufficient written instructions is

normally waived for Shareholders of Sterling Classes of

Shares if all the following conditions are met:

• Dealing instructions are given by the registered

holder in person;

• The holding is registered in a sole name;

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• The sale proceeds are to be made payable to the

registered holder at their registered address, which

has not changed within the previous 30 days; and

• The total amount payable in respect of sales by that

holder on one business day does not exceed

£15,000.

14.3 Minimum redemption

Subject to the Shareholder maintaining the minimum holding stated

in this Prospectus, part of a Shareholder’s holding may be sold but

the ACD reserves the right to refuse a request to sell Shares if the

value of the class of Shares of any Sub-fund to be sold is less than

the sum specified in Appendices 1 and 4.

14.4 Regular Withdrawal Facility on M&G Dividend Fund

14.4.1 Accumulation Shareholders, or Income Shareholders who

are having their income reinvested to purchase further

Shares, and whose holding in M&G Dividend Fund has a

value of at least £1000 may request that a percentage

value of their holding is automatically redeemed each year.

Such requests must be in writing using the “Regular

Withdrawal Facility” form available from the ACD.

14.4.2 Regular redemptions made using the Regular Withdrawal

Facility may not exceed, on an annualised basis, an

amount greater than 7% of the value of a Shareholding in

M&G Dividend Fund.

14.4.3 Subject to the percentage figure in 14.4.2 regular

redemptions may be made on a monthly, quarterly, half-

yearly or annual basis and will be based upon one twelfth,

one quarter, one half or the whole requested percentage

value of the Shareholder’s holding, respectively. The value

of the Shareholding will be calculated using the prevailing

price on the day the regular redemption is made (see

14.4.4).

14.4.4 Regular redemptions will be made on the last day of each

month. Where the last day of a month is not a Dealing Day,

the redemption will take place on the next Dealing Day.

Settlement will occur four business days following the

redemption. The first redemption will occur in the month

following receipt of a Shareholder’s “Regular Withdrawal

Facility” form.

14.4.5 Settlement of redemptions from the Regular Withdrawal

Facility will be made only to the Bank Account nominated

on the “Regular Withdrawal Facility” form.

14.4.6 Accumulation Shareholders using the Regular Withdrawal

Facility may vary their nominated Bank Account, frequency

of redemption or the annual percentage redemption figure

by completing a new “Regular Withdrawal Facility” form.

14.4.7 Shares redeemed as part of the Regular Withdrawal

Facility will not be subject to any Redemption Charge (see

16.2).

14.4.8 Shareholders using the Regular Withdrawal Facility should

note that such redemptions are treated as disposals for the

purposes of Capital Gains Tax.

14.4.9 Shareholders should note that where the annual

percentage growth in value of their holding is less than the

annual percentage value being redeemed using the

Regular Withdrawal Facility, they will in effect be eroding

the capital value of their original investment.

15 Switching and converting shares

15.1 Switching

15.1.1 Holders of Shares in a Sub-fund may at any time switch all

or some of their Shares of one Sub-fund (‘Original Shares’)

for Shares of another Sub-fund of this or another M&G

OEIC (‘New Shares’) provided they are eligible to hold

Shares in that class or Sub-fund and are in the same

currency. The number of New Shares issued will be

determined by reference to the respective prices of New

Shares and Original Shares at the valuation point

applicable at the time the Original Shares are redeemed

and the New Shares are issued.

15.1.2 Switching may be effected by giving instructions to the

ACD and the Shareholder may be required to provide

sufficient written instructions (which, if required - see

paragraph 14.2.3 - in the case of joint Shareholders must

be signed by all the joint holders).

15.1.3 The ACD may at its discretion charge a fee on the

switching of Shares between Sub-funds (see paragraph

16.3). When a fee is charged it will not exceed the

aggregate of the relevant redemption and initial charges in

respect of the Original Shares and the New Shares.

15.1.4 If the switch would result in the Shareholder holding a

number of Original Shares or New Shares of a value which

is less than the minimum holding in the Sub-fund

concerned the ACD may, if it thinks fit, switch the whole of

the applicant’s holding of Original Shares to New Shares

or refuse to effect any switch of the Original Shares. No

switches will be effected during any period when the right

of Shareholders to require the redemption of their Shares

is suspended. The general provision on procedures

relating to redemption will apply equally to a switch. Switch

instructions must be received by the ACD before the

valuation point on a Dealing Day in the Sub-fund or Sub-

funds concerned to be dealt with at the prices at those

valuation points on that Dealing Day, or at such other date

as may be approved by the ACD. Switch requests received

after a valuation point will be held over until the valuation

point in the next Dealing Day in the relevant Sub-fund or

Sub-funds.

15.1.5 The ACD may adjust the number of New Shares to be

issued to reflect the imposition of any switching fee

together with any other charges or levies in respect of the

issue or sale of the New Shares or repurchase or

cancellation of the Original Shares as may be permitted

pursuant to the Regulations.

15.1.6 Please note that a switch of Shares in one Sub-fund for

Shares in any other Sub-fund is treated as a redemption

and sale and will, for persons subject to UK taxation, be a

realisation for the purposes of capital gains taxation.

15.1.7 A Shareholder who switches Shares in one Sub-fund for

Shares in any other Sub-fund has no right by law to

withdraw from or cancel the transaction.

15.1.8 Terms and current charges for the switching of Shares of

any class of any Sub-fund, including for the Shares issued

by another M&G OEIC or for the switching of units in a

regulated scheme operated by the ACD, may be obtained

from the ACD.

15.2 Conversions

15.2.1 Conversions of Income Shares to Accumulation Shares

and of Accumulation Shares to Income Shares of the

same Class in the same Sub-fund are undertaken by

reference to the respective Share prices. For persons

subject to UK taxation, this will not be a realisation for the

purposes of capital gains taxation.

15.2.2 Where a Sub-fund issues multiple Share Classes, a

Shareholder may convert Shares of one Class for Shares

in another Class where they are eligible to hold the other

Class. Requests to convert between Share Classes must

be submitted using the appropriate form available from the

ACD. Such conversions will be executed within three

Dealing Days of receipt of a valid instruction. Requests to

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convert between Share Classes are undertaken by

reference to the respective Share prices of each Class. For

interest distributing funds, whose prices are calculated net

of income tax, these prices will be “net” prices. The impact

of using net prices where the conversion of Shares is to a

Class with a lower ACD’s annual remuneration (see

Appendix 1) is that the Sub-fund’s total tax charge will

increase and this increase will be borne by all

Shareholders in the receiving Share Class. This approach

has been agreed with the Depositary subject to the total

impact to Shareholders being immaterial. Where the ACD

determines at its absolute discretion that Share Class

conversions are materially prejudicial to the Shareholders

of a Share Class, instructions to convert between Share

Classes will only be executed on the Dealing Day following

the relevant Sub-fund’s XD date. In such circumstances,

instructions to convert between Share Classes must be

received by the ACD no sooner than ten business days

before the Sub-fund’s relevant XD date.

15.2.3 Please note that conversions may be subject to a fee. The

fee will not exceed an amount equal to the aggregate of

the then prevailing redemption charge (if any) in respect of

Original Shares and the initial charge (if any) in respect of

New Shares and is payable to the ACD.

16 Dealing charges

16.1 Initial Charge

The ACD may impose a charge on the buying of Shares. This

charge is a percentage of the total amount of your investment and

is deducted from your investment before Shares are purchased.

The current level in relation to the Sub-funds are set out for each

Sub-fund in Appendices 1 and 4 and are subject to discounts that

the ACD at its absolute discretion may apply from time to time.

Increases from the current rates of charge can only be made in

accordance with the Regulations and after the ACD has revised the

Prospectus to reflect the increased rate.

16.2 Redemption Charge

16.2.1 The ACD may make a charge on the cancellation and

redemption (including transfer) of Shares. At present, a

redemption charge is levied only on the selling of Shares

in a Sub-fund which does not have an initial charge on the

buying of Shares. Other Shares issued and bought, and

persons known to the ACD to have made arrangements for

the regular purchase of other Shares while this Prospectus

is in force, will not be subject to any redemption charge

introduced in the future in respect of those Shares.

Currently, those Shares deemed to carry a redemption

charge will carry a reducing redemption charge calculated

in accordance with the table below. With accumulation

shares, where any income is reinvested back into the share

price, the valuation when calculating a redemption will

include the capital gain associated with this reinvested

income. In relation to the imposition of a redemption

charge as set out above, where Shares of the class in

question have been purchased at different times by a

redeeming Shareholder, the Shares to be redeemed shall

be deemed to be the Shares which incur the least cost to

the Shareholder and thereafter the Shares purchased first

in time by that Shareholder.

Redemption charge table

The deduction from the mid value for redemption before

the following anniversaries would be:

1st year 4.5%

2nd year 4.0%

3rd year 3.0%

4th year 2.0%

5th year 1.0%

Thereafter Nil

16.2.2 The ACD may not introduce or increase a redemption

charge on Shares unless:

16.2.2.1 the ACD has complied with the Regulations

in relation to that introduction or change;

and

16.2.2.2 the ACD has revised the Prospectus to

reflect the introduction or change and the

date of its commencement and has made

the revised Prospectus available.

16.2.3 In the event of a change to the rate or method of

calculation of a redemption charge, details of the previous

rate or method of calculation will be available from the

ACD.

16.3 Switching Fee

On the switch of Shares of a Sub-fund for Shares of another Sub-

fund the Instrument of Incorporation authorises the Company to

impose a switching fee. The fee will not exceed an amount equal to

the aggregate of the then prevailing redemption charge (if any) in

respect of Original Shares and the initial charge (if any) in respect

of New Shares and is payable to the ACD.

16.3.1 If the switch is between Sub-funds and would be a large

deal for purposes of SDRT (see paragraph 18.3) then

applicable further charges may be imposed. Subject to

this, the ACD will normally waive the initial charge (if any)

in respect of New Shares if a switch is made to the same

class of Share within a different Sub-fund.

17 Other dealing information

17.1 Dilution

17.1.1 The basis on which each Sub-fund’s investments are

valued for the purpose of calculating the price of Shares as

stipulated in the Regulations and the Company’s

Instrument of Incorporation is summarised in section 24.

However, the actual cost of purchasing or selling

investments for a Sub-fund may deviate from the mid-

market value used in calculating the price of Shares in the

Sub-fund due to dealing costs such as broking charges,

taxes, and any spread between the buying and selling

prices of the underlying investments. These dealing costs

can have an adverse effect on the value of the Sub-fund,

known as “dilution”. The Regulations allow the cost of

dilution to be met directly from the Sub-fund’s assets or to

be recovered from investors on the purchase or

redemption of Shares in the Sub-fund inter alia by means

of a dilution adjustment to the dealing price, and this is the

policy which has been adopted by the ACD. The ACD shall

comply with rule COLL 6.3.8R in its application of any such

dilution adjustment. The ACD’s policy is designed to

minimise the impact of dilution on any Sub-fund.

17.1.2 The dilution adjustment for each Sub-fund will be

calculated by reference to the estimated costs of dealing in

the underlying investments of that Sub-fund, including any

dealing spreads, commissions and transfer taxes. The

need to apply a dilution adjustment will depend on the

relative volume of sales (where they are issued) to

redemptions (where they are cancelled) of shares. The

ACD may apply a dilution adjustment on the issue and

redemption of such shares if, in its opinion, the existing

shareholders (for sales) or remaining shareholders (for

redemptions) might be adversely affected, and if in

applying a dilution adjustment, so far as practicable, it is fair

to all shareholders and potential shareholders. In specie

transfers will not be taken into account when determining

any dilution adjustment and any incoming portfolio will be

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valued on the same basis as the Sub-fund is priced (i.e.

offer plus notional dealing charges, mid, or bid less notional

dealing charges). When a dilution adjustment is not applied

there may be a dilution of the assets of the Sub-fund which

may constrain the future growth of that Sub-fund.

17.1.3 The ACD may alter its current dilution adjustment policy by

giving shareholders at least 60 days’ notice and amending

the Prospectus before the change takes effect.

17.1.4 Based on experience, the ACD would typically expect to

make a dilution adjustment on most days, and this would

ordinarily be of the magnitude shown in the table below.

The ACD reserves the right to adjust the price by a lesser

amount but will always make such an adjustment in a fair

manner solely to reduce dilution and not for the purpose of

creating a profit or avoiding a loss for the account of the

ACD or an associate. It should be noted that as dilution is

related to inflows and outflows of monies and the purchase

and sale of investments it is not possible to predict

accurately if and when dilution will occur and to what

extent.

Dilution adjustment table

Typical dilution adjustments for the following Sub-funds

would be:

M&G Corporate Bond Fund +0.33% / - 0.32%

M&G Dividend Fund +0.62% / - 0.17 %

M&G Emerging Markets Bond Fund +0.39%/ - 0.40%

M&G European Corporate Bond Fund +0.23%/ - 0.23%

M&G European High Yield Bond Fund +0.45%/ - 0.46%

M&G Fund of Investment Trust Shares +0.86%/ - 0.52%

M&G Global Government Bond Fund +0.10% / - 0.10%

M&G Recovery Fund +0.83%/ - 0.36%

M&G Smaller Companies Fund +0.92%/ - 0.47%

Positive dilution adjustment figures indicate a typical

increase from mid price when the Sub-fund is experiencing

net issues. Negative dilution adjustment figures indicate a

typical decrease from mid price when the Sub-fund is

experiencing net redemptions. Figures are based on the

historic costs of dealing in the underlying investments

of the relevant Sub-funds for the twelve months to

30 September 2014, including any spreads, commissions

and transfer taxes.

17.2 In specie issues and redemptions

At its absolute discretion the ACD may agree or determine that

instead of payment in cash to, or from, the Shareholder for Shares

in a Sub-fund, the settlement of an issue or redemption transaction

may be effected by the transfer of property into or out of the assets

of the Company on such terms as the ACD shall decide in

consultation with the investment manager and the Depositary. In the

case of redemptions, the ACD shall give notice to the Shareholder

prior to the redemption proceeds becoming payable of its intention

to transfer property to the Shareholder and, if required by the

Shareholder, may agree to transfer to the Shareholder the net

proceeds of the sale of such property.

The ACD may also offer to sell an investor’s property and invest the

proceeds by purchasing Shares in the Company, subject to detailed

terms and conditions available upon request.

17.3 Client Account

Cash may be held for investors in a client account in certain

circumstances. Interest is not paid on any such balances.

17.4 Excessive Trading

17.4.1 The ACD generally encourages Shareholders to invest in

Sub-funds as part of a medium to long-term investment

strategy and discourages excessive, short term, or abusive

trading practices. Such activities may have a detrimental

effect on the Sub-funds and other Shareholders. The ACD

has several powers to help ensure that Shareholder

interests are protected from such practices. These include:

17.4.1.1 Refusing an application for Shares (see

paragraph 13.1.2);

17.4.1.2 Fair Value Pricing (see paragraph 24); and,

17.4.1.3 Applying the Dilution Adjustment (see

paragraph 17.1).

17.4.2 We monitor shareholder dealing activity and if we identify

any behaviour that, in our view, constitutes inappropriate or

excessive trading, we may take any of the following steps

with the shareholders we believe are responsible:

17.4.2.1 Issue warnings which if ignored may lead to

further applications for Shares being

refused;

17.4.2.2 Restrict methods of dealing available to

particular Shareholders; and/or,

17.4.2.3 Impose a switching fee (see paragraph

16.3).

17.4.3 We may take these steps at any time, without any

obligation to provide prior notice and without any liability for

any consequence that may arise.

17.4.4 Inappropriate or excessive trading can sometimes be

difficult to detect particularly where transactions are placed

via a nominee account. The ACD therefore cannot

guarantee that its efforts will be successful in eliminating

such activities and their detrimental effects.

18 Stamp Duty Reserve Tax (‘SDRT’)

18.1 The stamp duty reserve tax (SDRT) charge on UK unit trusts and

open-ended investment companies (OEICs) has been abolished

with effect from 30 March 2014. A principal SDRT charge of 0.5%

has been retained to be made on the value of non-pro rata in specie

redemptions. This is a principal SDRT charge payable by the

investor by reference to the value of chargeable securities

redeemed in this type of transaction.

19 Money laundering

As a result of legislation in force in the United Kingdom to prevent

money laundering, firms conducting investment business are

responsible for compliance with money laundering regulations. The

ACD may verify your identity electronically when you undertake

certain transactions. In certain circumstances investors may be

asked to provide proof of identity when buying or selling shares.

Normally this will not result in any delay in carrying out instructions

but, should the ACD request additional information, this may mean

that instructions will not be carried out until the information is

received. In these circumstances, the ACD may refuse to issue or,

redeem Shares, release the proceeds of redemption or carry out

such instructions.

20 Restrictions on dealing

20.1 The ACD may from time to time impose such restrictions as it may

think necessary for the purpose of ensuring that no Shares are

acquired or held by any person in breach of the law or

governmental regulation (or any interpretation of a law or regulation

by a competent authority) of any country or territory. In this

connection, the ACD may, inter alia, reject in its discretion any

application for the issue, sale, redemption, cancellation or switch of

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Shares or require the mandatory redemption of Shares or transfer

of Shares to a person qualified to hold them.

20.2 The distribution of this prospectus and the offering of Shares in or

to persons resident in or nationals of or citizens of jurisdictions

outside the UK or who are nominees of, custodians or trustees for,

citizens or nationals of other countries may be affected by the laws

of the relevant jurisdictions. Such Shareholders should inform

themselves about and observe any applicable legal requirements.

It is the responsibility of any Shareholder to satisfy himself as to the

full observance of the laws and regulatory requirements of the

relevant jurisdiction, including obtaining any governmental,

exchange control or other consents which may be required, or

compliance with other necessary formalities needing to be

observed and payment of any issue, transfer or other taxes or

duties due in such jurisdiction. Any such Shareholder will be

responsible for any such issue, transfer or other taxes or payments

by whomsoever payable and the Company (and any person acting

on behalf of it) shall be fully indemnified and held harmless by such

Shareholder for any such issue, transfer or other taxes or duties as

the Company (and any person acting on behalf of it) may be

required to pay.

20.3 If it comes to the notice of the ACD that any Shares (“affected

Shares”) are owned directly or beneficially in breach of any law or

governmental regulation (or any interpretation of a law or regulation

by a competent authority) of any country or territory, which would

(or would if other Shares were acquired or held in like

circumstances) result in the Company incurring any liability to

taxation which the Company would not be able to recoup itself or

suffering any other adverse consequence (including a requirement

to register under any securities or investment or similar laws or

governmental regulations of any country or territory) or by virtue of

which the Shareholder or Shareholders in question is/are not

qualified to hold such Shares or if it reasonably believes this to be

the case, the ACD may give notice to the Shareholder(s) of the

affected Shares requiring the transfer of such Shares to a person

who is qualified or entitled to own them or that a request in writing

be given for the redemption of such Shares. If any Shareholder

upon whom such a notice is served does not within thirty days after

the date of such notice transfer their affected Shares to a person

qualified to own them or submit a written request for their

redemption to the ACD or establish to the satisfaction of the ACD

(whose judgement is final and binding) that they or the beneficial

owner are qualified and entitled to own the affected Shares, they

shall be deemed upon the expiration of that thirty day period to

have given a request in writing for the redemption or cancellation (at

the discretion of the ACD) of all the affected Shares pursuant to the

Regulations.

20.4 A Shareholder who becomes aware that they are holding or own

affected Shares shall forthwith, unless they have already received a

notice as aforesaid, either transfer all their affected Shares to a

person qualified to own them or submit a request in writing to the

ACD for the redemption of all their affected Shares.

20.5 Where a request in writing is given or deemed to be given for the

redemption of affected Shares, such redemption will be effected in

the same manner as provided for under the Regulations, if effected

at all.

21 Suspension of dealings in the Company

21.1 The ACD may with the agreement of the Depositary, or must if the

Depositary so requires temporarily suspend for a period the issue,

sale, cancellation and redemption of Shares or any class of Shares

in any or all of the Sub-funds if the ACD or the Depositary is of the

opinion that due to exceptional circumstances there is good and

sufficient reason to do so having regard to the interests of

Shareholders.

21.2 The ACD will notify Shareholders as soon as is practicable after the

commencement of the suspension, including details of the

exceptional circumstances which have led to the suspension, in a

clear, fair and not misleading way and giving Shareholders details

of how to find further information about the suspensions.

21.3 Where such suspension takes place, the ACD will publish, on its

website or other general means, sufficient details to keep

Shareholders appropriately informed about the suspension,

including, if known, its possible duration.

21.4 During the suspension none of the obligations in COLL 6.2

(Dealing) will apply but the ACD will comply with as much of COLL

6.3 (Valuation and Pricing) during the period of suspension as is

practicable in light of the suspension.

21.5 Re-calculation of the Share price for the purpose of sales and

purchases will commence on the next relevant valuation point

following the ending of the suspension.

22 Governing law

All deals in Shares are governed by English law.

23 Valuation of the Company

23.1 The price of a Share of a particular class in the Company is

calculated by reference to the Net Asset Value of the Sub-fund to

which it relates and attributable to that class and adjusted for the

effect of charges applicable to that class and further adjusted to

reduce any dilutive effect of dealing in the Sub-fund (for more detail

of dilution adjustment see 15.1). The Net Asset Value per Share of

a Sub-fund is currently calculated at 12.00 noon UK time on each

Dealing Day.

23.2 The ACD may at any time during a Dealing Day carry out an

additional valuation if the ACD considers it desirable to do so.

24 Calculation of the Net Asset Value

24.1 The value of the scheme property of the Company or Sub-fund (as

the case may be) shall be the value of its assets less the value of

its liabilities determined in accordance with the following provisions.

24.2 All the scheme property (including receivables) of the Company (or

the Sub-fund) is to be included, subject to the following provisions.

24.3 Property which is not cash (or other assets dealt with in paragraph

24.4) or a contingent liability transaction shall be valued as follows

and the prices used shall be (subject as follows) the most recent

prices which it is practicable to obtain:

24.3.1 units or shares in a collective investment scheme:

24.3.1.1 if, a single price for buying and selling units

is quoted, at the most recent such price; or

24.3.1.2 if, separate buying or selling prices are

quoted, at the average of the two prices

provided the buying price has been reduced

by any initial charge included therein and

the selling price excludes any exit or

redemption charge attributable thereto; or

24.3.1.3 if, in the opinion of the ACD, the price

obtained is unreliable or no recent traded

price is available or no recent price exists or

if the most recent price available does not

reflect the ACD’s best estimate of the value

of the units or shares, at a value which, in

the opinion of the ACD, is fair and

reasonable;

24.3.2 exchange-traded derivative contracts:

24.3.2.1 if, a single price for buying and selling the

exchange-traded derivative contract is

quoted, at that price; or

24.3.2.2 if, separate buying and selling prices are

quoted, at the average of the two prices; or

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24.3.3 over-the-counter derivative products shall be valued in

accordance with the method of valuation as shall have

been agreed between the ACD and the Depositary;

24.3.4 any other investment;

24.3.4.1 if, a single price for buying and selling the

security is quoted, at that price; or

24.3.4.2 if, separate buying and selling prices are

quoted, the average of those two prices; or

24.3.4.3 if, in the opinion of the ACD, the price

obtained is unreliable or no recent traded

price is available or if no price exists or if

the most recent price available does not

reflect the ACD’s best estimate of the value

of the securities, at a value which in the

opinion of the ACD is fair and reasonable;

24.3.5 property other than that described in paragraphs 24.3.1,

24.3.2, 24.3.3 and 24.3.4 above: at a value which, in the

opinion of the ACD, represents a fair and reasonable mid-

market price.

24.4 Cash and amounts held in current, deposit and margin accounts

and in other time-related deposits shall normally be valued at their

nominal values.

24.5 In determining the value of the scheme property, all instructions

given to issue or cancel Shares shall be assumed (unless the

contrary is shown) to have been carried out and any cash payment

made or received and all consequential action required by

Regulations or the Instrument shall be assumed (unless the

contrary shown to have been taken).

24.6 Subject to paragraphs 24.7 and 24.8 below, agreements for the

unconditional sale or purchase of property which are in existence

but uncompleted shall be assumed to have been completed and all

consequential action required to have been taken. Such

unconditional agreements need not be taken into account if made

shortly before the valuation takes place and, in the opinion of the

ACD, their omission will not materially affect the final Net Asset

Value amount.

24.7 Futures or contracts for differences which are not yet due to be

performed and unexpired and unexercised written or purchased

options shall not be included under paragraph 24.6.

24.8 All agreements are to be included under paragraph 24.7 which are,

or ought reasonably to have been, known to the person valuing the

property.

24.9 An estimated amount for anticipated tax liabilities (on unrealised

capital gains where the liabilities have accrued and are payable out

of the property of the Scheme; on realised capital gains in respect

of previously completed and current accounting periods; and on

income where liabilities have accrued) at that point in time including

(as applicable and without limitation) capital gains tax, income tax,

corporation tax, value added tax, stamp duty, Stamp Duty Reserve

Tax and any foreign taxes and duties will be deducted.

24.10 An estimated amount for any liabilities payable out of the scheme

property and any tax thereon treating periodic items as accruing

from day to day will be deducted.

24.11 The principal amount of any outstanding borrowing whenever

repayable and any accrued but unpaid interest on borrowing will be

deducted.

24.12 An estimated amount for accrued claims for repayments of tax of

whatever nature to the Company which may be recoverable will be

added.

24.13 Any other credits or amounts due to be paid into the scheme

property will be added.

24.14 A sum representing any interest or any income accrued due or

deemed to have accrued but not received will be added.

24.15 The amount of any adjustment deemed necessary by the ACD to

ensure that the Net Asset Value is based on the most recent

information and is fair to all Shareholders will be added or deducted

as appropriate.

24.16 Currencies or values in currencies other than a Sub-fund’s

Valuation Currency shall be converted at the relevant valuation

point at a prevailing rate of exchange which is not likely to result in

any material prejudice to the interests of Shareholders or potential

Shareholders. The Valuation Currency of each Sub-fund is noted in

Appendices 1 and 4.

25 Price per share in each Sub-fund and each class

The price per Share at which Shares are bought by investors is the

sum of the Net Asset Value of a Share adjusted to reduce any

dilutive effect of dealing in the Sub-fund (for more detail of dilution

adjustment see 17.1) before any initial charge. The price per Share

at which Shares are sold by investors is the Net Asset Value per

Share adjusted to reduce any dilutive effect of dealing in the Sub-

fund (for more detail of dilution adjustment see 17.1) before any

applicable redemption charge. In addition, there may, for both

purchases and sales, be a charge for SDRT as described in

paragraph 18.

26 Pricing basis

There shall be a single price for a Share in any Class. The

Company deals on a forward pricing basis. A forward price is the

price calculated at the next valuation point after the purchase or

sale is agreed.

27 Publication of prices


4)

The most recent price of Sterling Class A and X Shares appear

daily on our web-site at www.mandg.co.uk or can be obtained free

from M&G Customer Relations on 0800 390390. The most recent

price of Sterling Class I Shares appear on M&G’s institutional client

website at www.mandgfunds.co.uk. The most recent price of

Sterling Class C shares appear on M&G’s intranet site.

28 Risk factors

Potential investors should consider the risk factors referenced in

Section 41 before investing in the Company.

29 Charges and Expenses

Introduction

This section details the payments that may be made out of the Company and

its Sub-funds to the parties operating the Company and its Sub-funds, to

meet the costs of administration of the Company and its Sub-funds and in

respect of the investment and safekeeping of their scheme property.

Each Class of shares in a Sub-fund has an Ongoing Charges Figure and this

is shown in the relevant Key Investor Information Document. The Ongoing

Charges Figure is intended to assist Shareholders to ascertain and

understand the impact of charges on their investment each year and to

compare the level of those charges with the level of charges in other funds.

The Ongoing Charges Figure excludes portfolio transaction costs and any

initial charge or redemption charge but will capture the effect of the various

charges and expenses referred to in this section. In common with other types

of investors in financial markets, the Sub-funds incur costs when buying and

selling underlying investments in pursuit of their investment objective. These

portfolio transaction costs include dealing spread, broker commissions,

transfer taxes and stamp duty incurred by the Sub-fund on transactions. The

annual and half-yearly reports of each Sub-fund provide further information

on portfolio transaction costs incurred in the relevant reporting period.

VAT may be payable on the charges or expenses mentioned in this section.

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29.1 The ACD’s Annual Management Charge

29.1.1 The ACD is permitted to take a charge from each Share

Class of each Sub-fund as payment for carrying out its

duties and responsibilities. This is known as the ACD’s

“Annual Management Charge” (sometimes abbreviated to

“AMC”).

29.1.2 The Annual Management Charge is based on a

percentage of the Net Asset Value of each Share Class in

each Sub-fund. The annual rate of this charge is set out for

each Sub-fund in Appendices 1 and 4.

29.1.3 Each day the ACD charges one-365th of the Annual

Management Charge (or one-366th if it is a leap year). If

the day is not a Dealing Day, the ACD will take the charge

into account on the next Dealing Day. The ACD calculates

this charge using the Net Asset Value of each Share Class

on the previous Dealing Day.

29.1.4 Though the Annual Management Charge is calculated and

taken into account daily in each Share Class’s price, it is

actually paid to the ACD every fortnight.

29.1.5 Where a Sub-fund invests in the units or shares of another

fund managed by the ACD, or by an associate of the ACD,

the ACD will reduce its Annual Management Charge by the

amount of any equivalent charge that has been taken on

the underlying funds. Underlying funds will also waive any

initial or redemption charges which might otherwise apply.

That way, the ACD ensures that Shareholders are not

charged twice.

29.2 The ACD’s Administration Charge

29.2.1 The ACD is permitted to take a charge from each Share

Class of each Sub-fund as payment for administrative

services to the Company. This is called the Administration

Charge. This covers costs such as the maintenance of the

Company’s register, the internal administrative costs

involved in buying and selling shares in each Sub-fund, the

payment of each Sub-fund’s distributions, and the payment

of the fees of regulators in the UK or in other countries

where Sub-funds are registered for sale.

29.2.2 The Administration Charge is based on a percentage of

the Net Asset Value of each Share Class in each Sub-

fund. The annual rate of this charge is set out in

Appendices 1 and 4 (plus any value added tax if

applicable).

29.2.3 The Administration Charge is calculated and taken into

account daily and is paid fortnightly to the ACD on the

same basis as described at 29.1.3 and 29.1.4 for the

Annual Management Charge.

29.2.4 If the cost of providing administrative services to the

Company is more than the Administration Charge taken in

any period, the ACD will make up the difference. If the cost

of providing administrative services to the Company is less

than the Administration Charge taken in any period, the

ACD will keep the difference.

29.3 The ACD’s Share Class Hedging Charge

29.3.1 The ACD is permitted to take a charge from each hedged

Share Class of each Sub-fund as payment for hedging

services to that Share Class. This is called the Share Class

Hedging Charge.

29.3.2 The Share Class Hedging Charge is a variable rate

detailed in Appendices 1 and 4 (plus any value added tax

if applicable). The exact rate will vary within the specified

range depending upon the total amount of share class

hedging activities across the entire range of OEICs

managed by the ACD.

29.3.3 The Share Class Hedging Charge is calculated and taken

into account daily and paid fortnightly on the same basis as

described at 29.1.3 and 29.1.4] for the Annual

Management Charge.

29.3.4 If the cost of providing share class hedging services to the

Sub-fund is more than the Share Class Hedging Charge

taken in any period, the ACD will make up the difference. If

the cost of providing share class hedging services to the

Company is less than the Share Class Hedging Charge

taken in any period, the ACD will keep the difference.

29.4 The Depositary’s Charges and Expenses

29.4.1 The Depositary takes a charge from each Sub-fund as

payment for its duties as depositary. This is called the

Depositary’s Charge.

29.4.2 The Depositary’s Charge is based on the Net Asset Value

of each Sub-fund, and is charged on a sliding scale as

follows:

Percentage charge

per annum Net Asset value

0.0075% First £150 million

0.005% Next £500 million

0.0025% Balance above £650 million

This sliding scale is agreed between the ACD and the Depositary

and may be changed. If it does change, the ACD will inform you in

accordance with the COLL Sourcebook.

29.4.3 The Depositary’s Charge is calculated and taken into

account daily and is paid fortnightly to the Depositary on

the same basis as described at 29.1.3 and 29.1.4 for the

Annual Management Charge.

29.4.4 The Depositary may also make a charge for its services in

relation to:

• distributions,

• the provision of banking services,

• holding money on deposit,

• lending money,

• engaging in stock lending, derivative or unsecured

loan transactions,

• the purchase or sale, or dealing in the purchase or

sale of, Scheme Property,

provided that the services are in accordance with the provisions of

the COLL Sourcebook.

29.4.5 The Depositary is also entitled to payment and

reimbursement of all costs, liabilities and expenses it incurs

in the performance of, or in arranging the performance of,

functions conferred on it by the Instrument of

Incorporation, the COLL Sourcebook or by general law.

Such expenses generally include, but are not restricted to:

• delivery of stock to the Depositary or custodian;

• collection and distribution of income and capital;

• submission of tax returns and handling tax claims;

• such other duties as the Depositary is permitted or

required by law to perform.

29.5 Custody Charges

29.5.1 The Depositary is entitled to be paid a Custody Charge in

relation to the safe-keeping of each Sub-fund’s assets

(“custody”).

29.5.2 The Custody Charge is variable depending upon the

specific custody arrangements for each type of asset. The

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Custody Charge is a range between 0.00005% and 0.40%

of the asset values per annum.

29.5.3 The Custody Charge is taken into account daily in each

Share Class’s price. It is calculated each month using the

value of each asset type and it is paid to State Street Bank

and Trust Company when it invoices the Sub-fund.

29.6 Custody Transaction Charges

29.6.1 The Depositary is also entitled to be paid Custody

Transaction Charges in relation to processing transactions

in each Sub-fund’s assets.

29.6.2 The Custody Transaction Charges vary depending on the

country and the type of transaction involved. The Custody

Transaction Charges generally range between £4 and £75

per transaction.

29.6.3 The Custody Transaction Charges are taken into account

daily in each Share Class’s price. It is calculated each

month based on the number of transactions that have

taken place and it is paid to State Street Bank and Trust

Company when it invoices the Sub-fund.

29.7 Other Expenses

29.7.1 The costs and expenses relating to the authorisation and

incorporation and establishment of the Company, the offer

of Shares, the preparation and printing of this Prospectus

and the fees of the professional advisers to the Company

in connection with the offer will be borne by the ACD.

29.7.2 The direct establishment costs of each Sub-fund formed,

or Share Class created, may be borne by the relevant Sub-

fund or by the ACD at its discretion.

29.7.3 The Company may pay out of the property of the

Company charges and expenses incurred by the

Company unless they are covered by the Administration

Charge. These include the following expenses:

29.7.3.1 reimbursement of all out of pocket

expenses incurred by the ACD in the

performance of its duties;

29.7.3.2 broker’s commission, taxes and duties

(including stamp duty and / or Stamp Duty

Reserve Tax), and other disbursements

which are necessarily incurred in effecting

transactions for the Sub-funds;

29.7.3.3 any fees or expenses of any legal or other

professional adviser of the Company;

29.7.3.4 any costs incurred in respect of meetings of

Shareholders convened on a requisition by

Shareholders but not those convened by

the ACD or an associate of the ACD;

29.7.3.5 liabilities on unitisation, amalgamation or

reconstruction including certain liabilities

arising after transfer of property to the Sub-

funds in consideration for the issue of

Shares as more fully detailed in the

Regulations;

29.7.3.6 interest on borrowing and charges incurred

in effecting or terminating such borrowing

or in negotiating or varying the terms of

such borrowing on behalf of the Sub-funds;

29.7.3.7 taxation and duties payable in respect of

the property of the Sub-funds or of the

issue or redemption of Shares, including

SDRT;

29.7.3.8 the audit fees of the Auditor (including value

added tax) and any expenses of the

Auditor;

29.7.3.9 if the Shares are listed on any stock

exchange, the fees connected with the

listing (though none of the Shares are

currently listed); and,

29.7.3.10 any value added or similar tax relating to

any charge or expense set out herein.

29.7.4 In certain circumstances, the Investment Manager may

participate in a commission sharing arrangement. This is a

term given to the system of commission payments

awarded to participating brokers from the Investment

Manager which may be used to pay other third party

research providers. The participating brokers agree to “give

up” commission payments in relation to equity trades to the

research provider. This arrangement is founded on the

basis that the participating broker keeps part of the

commission for the execution service and the research

provider receives commission for the research services

provided to the Investment Manager.

29.8 Allocation of charges

For each Sub-fund, the charges and expenses described in this

section are either charged to capital or income (or both) in

accordance with the Regulations. Where the investment objective of

a Sub-fund is to treat the generation of income as an equal or

higher priority than the generation of capital growth, all or part of its

proportion of the charges and expense may be charged against

capital instead of against income. This can only be done with the

approval of the Depositary. This treatment of the charges and

expense may increase the amount of income available for

distribution to Shareholders in the Sub-fund concerned, but it may

constrain capital growth. For those Share Classes where charges

and expenses are paid from income, if there is insufficient income

to fully pay those charges and expenses, the residual amount is

taken from capital.

Appendix 1 and Appendix 4 details whether the charges and

expense are taken from income or capital for each Sub-fund.

30 Stock lending

30.1 The Company or the Depositary at the request of the Company,

may enter into certain stocklending arrangements in respect of the

Company or a Sub-fund. The Company or the Depositary delivers

securities which are the subject of the stocklending arrangement in

return for an agreement that securities of the same kind and

amount should be redelivered to the Company or the Depositary at

a later date. The Company or the Depositary at the time of delivery

receives collateral to cover the risk of the future redelivery not being

completed. There is no limit on the value of the property of the

Company which may be the subject of stocklending arrangements.

30.2 Stocklending arrangements must be an arrangement of the kind

described in Section 263B of the Taxation of Chargeable Gains Act

1992. The arrangements must also comply with the requirements of

the Regulations.

31 Shareholder meetings and voting rights

31.1 Annual General Meeting

In accordance with the provisions of the Open-Ended Investment

Companies (Amendment) Regulations 2005, the Company has

elected not to hold annual general meetings.

31.2 Requisitions of Meetings

31.2.1 The ACD or the Depositary may requisition a general

meeting at any time.

31.2.2 Shareholders may also requisition a general meeting of the

Company. A requisition by Shareholders must state the

objects of the meeting, be dated, be signed by

Shareholders who, at the date of the requisition, are

registered as holding not less than one-tenth in value of all

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Shares then in issue and the requisition must be deposited

at the head office of the Company. The ACD must convene

a general meeting no later than eight weeks after receipt of

such requisition.

31.3 Notice and Quorum

Shareholders will receive at least 14 days notice of a Shareholders’

meeting (other than an adjourned meeting where a shorter period

of notice can apply) and are entitled to be counted in the quorum

and vote at such meeting either in person or by proxy. If after a

reasonable time from the time set for an adjourned meeting there

are not two Shareholders present in person or by proxy, the quorum

for the adjourned meeting shall be one person entitled to be

counted in a quorum and present at the meeting.. Notices of

meetings and adjourned meetings will normally be given in writing

to the Shareholder’s registered addresses (or, at the discretion of

the ACD, such other address which we may hold for the purposes

of correspondence).

31.4 Voting Rights

31.4.1 At a meeting of Shareholders, on a show of hands every

Shareholder who (being an individual) is present in person

or (being a corporation) is present by its representative

properly authorised in that regard, has one vote.

31.4.2 On a poll vote, a Shareholder may vote either in person or

by proxy. The voting rights attaching to each Share are

such proportion of the voting rights attaching to all the

Shares in issue that the price of the Share bears to the

aggregate price(s) of all the Shares in issue as at a cut-off

date selected by the ACD which is a reasonable time

before the notice of meeting is deemed to have been

served.

31.4.3 A Shareholder entitled to more than one vote need not, if

he votes, use all his votes or cast all the votes he uses in

the same way.

31.4.4 Except where the Regulations or the Instrument of

Incorporation of the Company require an extraordinary

resolution (which needs 75% of the votes cast at the

meeting to be in favour for the resolution to be passed) any

resolution required will be passed by a simple majority of

the votes validly cast for and against the resolution.

31.4.5 The ACD may not be counted in the quorum for a meeting

and neither the ACD nor any associate (as defined in the

Regulations) of the ACD is entitled to vote at any meeting

of the Company except in respect of Shares which the

ACD or associate holds on behalf of or jointly with a person

who, if the registered Shareholder, would be entitled to vote

and from whom the ACD or associate has received voting

instructions.

31.4.6 ‘Shareholders’ in this context of this paragraph 34 means

Shareholders as at a cut-off date selected by the ACD

which is a reasonable time before the notice of the relevant

meeting was deemed to have been served but excludes

holders of Shares who are known to the ACD not to be

Shareholders at the time of the meeting.

31.4.7 Investors in Euro, or Sterling where available, Share

Classes whose holdings are registered through M&G

International Investments Nominees Limited will be offered

a vote at general meetings when M&G International

Investments Limited considers, at its sole discretion, that

the investors’ interests may be materially affected.

31.5 Class and Sub-fund Meetings

The above provisions, unless the context otherwise requires, apply

to class meetings and meetings of Sub-funds as they apply to

general meetings of Shareholders.

31.6 Variation of Class Rights

The rights attached to a class may not be varied unless done so

pursuant to the notification requirements of COLL 4.3R.

32 Taxation

32.1 General

The information given under this heading does not constitute legal

or tax advice and prospective investors should consult their own

professional advisers about the implications of subscribing for,

buying, holding, exchanging, selling or otherwise disposing of

Shares under the laws of the jurisdiction in which they may be

subject to tax.

32.2 Taxation of the Company

32.2.1 Income

Each Sub-fund will be liable to corporation tax on its

taxable income less expenses at the lower rate of income

tax (currently 20%).

32.2.2 Capital gains

Capital gains accruing to a Sub-fund will be exempt from

UK tax.

32.3 Distributions

Sub-funds with over 60% invested in qualifying assets (broadly

interest paying) throughout the relevant distribution period can elect

to make interest distributions. It is the ACD’s current intention that

the M&G Corporate Bond Fund, the M&G Emerging Markets Bond

Fund, the M&G European Corporate Bond Fund, the M&G

European High Yield Bond Fund, and the M&G Global Government

Bond Fund will be managed in such a way that they will be able to

make interest distributions. In all other cases they will pay dividend

distributions.

32.4 Taxation of the investor

32.4.1 Dividend distributions - UK resident individual

shareholders

The distributions paid out or accumulated are dividends

which carry a tax credit at the rate of 10% of the gross

income. Individual shareholders whose income is within

the basic rate band will have no further tax to pay. Higher

rate taxpayers can set the tax credit against their tax

liability, which will be charged at a rate of 32.5% on

dividend income. For additional rate taxpayers the tax

credit can be set against their tax liability, which will be

charged at a rate of 37.5% on dividend income. For non

taxpayers, none of the tax credit is refundable. (42.5% will

apply to the new 50% tax rate). The distribution and

associated tax credit should be entered separately on

income tax returns. For non taxpayers, none of the tax

credit is refundable.

32.4.2 Dividend distributions – UK resident corporate

shareholders

Distributions will be divided into that part which relates to

UK dividend income of the Fund, and that part which

relates to other income. The part relating to UK dividend

income is not taxable. The tax credit received in respect of

it cannot be reclaimed. The other part is taxable as if it

were an annual payment and is subject to corporation tax.

The taxable part of the distribution is received net of an

income tax deduction of 20% which can be offset against

a shareholder’s liability to corporation tax and may be

recoverable. The tax voucher will show the ratio between

the part relating to UK dividend income (franked investment

income) and the part relating to taxable annual payments

and also shows, in terms of a pence per share rate, the tax

which can be recovered.

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32.4.3 Interest distributions

These are paid after deduction of income tax at the rate of

20%. The tax deducted will be creditable against an

investor’s liability to UK tax on interest distributions.

Individuals paying UK tax at 20% will not be subject to

further taxation; however, higher rate taxpayers will be

liable to pay further UK tax at their marginal rate. Certain

non-taxpayers and UK resident corporate Shareholders

should be able to reclaim from HM Revenue & Customs

the 20% tax deducted. Certain categories of Shareholder

may receive interest distributions gross, if they can

demonstrate to the satisfaction of the ACD that they are

eligible with reference to section 930 of the Income Tax Act

2007 or Regulation 26 of the Authorised Investment Funds

(Tax) Regulations 2006. The ACD will accept a completed

Declaration of Eligibility for Gross Interest Distributions

Form, or if appropriate, another HMRC form (Form 105

typically in the case of individuals), signed by persons

authorised to sign on behalf of the Shareholder declaring

to the ACD that they meet the necessary criteria as

described above to be entitled to gross distributions.

UK resident corporate Shareholders should note that

where they hold a fund which makes interest distributions,

gains will be subject to loan relationship rules. Where a

gross payment is made and the investor holds

Accumulation shares, we intend to use any element of

reclaimable tax to purchase further Accumulation shares in

that Sub-fund. If we do so we will waive any initial charge

due to us on such re-investment. These re-investments will

be made fourteen days before the relevant published

income allocation date.

32.4.4 Capital gains

Profits arising on disposal of shares are subject to capital

gains tax. However, if the total gains from all sources

realised by an individual share holder in a tax year, after

deducting allowable losses, are less than the annual

exemption, there is no capital gains tax to apply. Where

income equalisation applies (see below), the buying price

of Shares includes accrued income which is repaid to the

investor with the first allocation of income following the

purchase. This repayment is deemed to be a repayment of

capital and is therefore made without deduction of tax but

must be deducted from the investor’s base cost of the

relevant Shares for purposes of calculating any liability to

capital gains tax.

32.4.5 The above statements are only intended as a general

summary of UK tax law and practice as at the date of this

Prospectus and may change in the future. Any investor

who is in any doubt as to his or her UK tax position in

relation to the Company should consult a UK professional

adviser.

33 Income equalisation

33.1 Income equalisation will be applied to Shares issued by the

Company.

33.2 Part of the purchase price of a Share reflects the relevant share of

accrued income received or to be received by the Company. This

capital sum is returned to a Shareholder with the first allocation of

income in respect of a Share issued during the relevant accounting

period.

33.3 The amount of income equalisation is calculated by dividing the

aggregate of the amounts of income included in the price of

Shares issued to or bought by Shareholders in an annual or interim

accounting period (see paragraph 39.2.1) by the number of those

Shares and applying the resultant average to each of the Shares in

question.

34 Winding up of the Company or a Sub-fund of

the Company

34.1 The Company shall not be wound up except as an unregistered

company under Part V of the Insolvency Act 1986 or under the

Regulations. A Sub-fund may only be wound up under the

Regulations.

34.2 Where the Company or a Sub-fund is to be wound up under the

Regulations, such winding up may only be commenced following

approval by the FCA. The FCA may only give such approval if the

ACD provides a statement (following an investigation into the affairs

of the Company) either that the Company will be able to meet its

liabilities within 12 months of the date of the statement or that the

Company will be unable to do so.

34.3 The Company or a Sub-fund may be wound up under the

Regulations if:

34.3.1 an extraordinary resolution to that effect is passed by

Shareholders; or

34.3.2 the period (if any) fixed for the duration of the Company or

a particular Sub-fund by the Instrument of Incorporation

expires, or the event (if any) occurs on the occurrence of

which the Instrument of Incorporation provides that the

Company or a particular Sub-fund is to be wound up (for

example, if the share capital of the Company is below its

prescribed minimum or (in relation to any Sub-fund) the Net

Asset Value of the Sub-fund is less than £10,000,000, or if

a change in the laws or regulations of any country means

that, in the ACD’s opinion, it is desirable to terminate the

Sub-fund); or

34.3.3 on the date of effect stated in any agreement by the

FCA to a request by the ACD for the revocation of the

authorisation order in respect of the Company or the

Sub-fund.

34.4 On the occurrence of any of the above:

34.4.1 Regulations 6.2, 6.3 and 5 relating to Dealing, Valuation

and Pricing and Investment and Borrowing will cease to

apply to the Company or the Sub-fund;

34.4.2 the Company will cease to issue and cancel Shares in the

Company or the Sub-fund and the ACD shall cease to sell

or redeem Shares or arrange for the Company to issue or

cancel them for the Company or the Sub-fund;

34.4.3 no transfer of a Share shall be registered and no other

change to the register shall be made without the sanction

of the ACD;

34.4.4 where the Company is being wound up, the Company shall

cease to carry on its business except in so far as it is

beneficial for the winding up of the Company;

34.4.5 the corporate status and powers of the Company and,

subject to the provisions of Clauses 38.4.1 and 38.4.2

above, the powers of the ACD shall remain until the

Company is dissolved.

34.5 The ACD shall, as soon as practicable after the Company or the

Sub-fund falls to be wound up, realise the assets and meet the

liabilities of the Company or the Sub-fund and, after paying out or

retaining adequate provision for all liabilities properly payable and

retaining provision for the costs of winding up, arrange for the

Depositary to make one or more interim distributions out of the

proceeds to Shareholders proportionately to their rights to

participate in the scheme property of the Company or the Sub-

fund. When the ACD has caused all of the scheme property to be

realised and all of the liabilities of the Company or the Sub-fund to

be realised, the ACD shall arrange for the Depositary also to make

a final distribution to Shareholders as at (or prior to) the date on

which the final account is sent to Shareholders of any balance

remaining, if applicable, in proportion to their holdings in the

Company or the Sub-fund.

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34.6 On completion of a winding up of the Company, the Company will

be dissolved and any money which is legitimately the property of

the Company (including unclaimed distributions) and standing to

the account of the Company, will be paid into court within one

month of dissolution.

34.7 Following the completion of the winding up of the Company or the

Sub-fund, the ACD shall provide written confirmation to the Registrar

of Companies and shall notify the FCA that it has done so.

34.8 Following the completion of a winding up of either the Company

or a Sub-fund, the ACD must prepare a final account showing how

the winding up took place and how the scheme property was

distributed. The auditor of the Company shall make a report in

respect of the final account stating their opinion as to whether the

final account has been properly prepared. This final account and

the auditor’s report must be sent to the FCA, to each Shareholder

and, in the case of the winding up of the Company, to the

Registrar of Companies within two months of the termination of

the winding up.

34.9 As the Company is an umbrella company, any liabilities attributable

or allocated to a Sub-fund under the Regulations shall be met out

of the scheme property attributable or allocated to that Sub-fund.

34.10 Any assets and liabilities, expenses, costs and charges not

attributable to a particular Sub-fund may be allocated by the

Manager in a manner which it believes is fair to the Shareholders

generally. This will normally be pro-rata to the Net Asset Value of

the relevant Sub-funds.

34.11 Shareholders in a particular Sub-fund are not liable for the debts of

the Company or any Sub-fund in the Company. A Shareholder is not

liable to make any further payment to the Sub-Fund after he has

paid in full for the purchase of Shares.

35 General Information

35.1 Accounting Periods

The accounting period of the Company ends each year on 30 June

(the accounting reference date). The half-yearly accounting period

ends each year on 31 December.

35.2 Income Allocations

35.2.1 Allocations of income are made in respect of the income

available for allocation in each annual accounting period

and, for certain Sub-funds, each interim accounting period

(see Appendices 1 and 4).

35.2.2 Distributions of income for each Sub-fund are paid on or

before the annual income allocation date of 31 October

and where applicable on or before one or more of the

interim allocation dates of 31 January, 30 April and 31 July

in each year.

35.2.3 If a distribution remains unclaimed for a period of six years

after it has become due, it will be forfeited and will revert to

the Company.

35.2.4 The amount available for allocation in any accounting

period is calculated by taking the aggregate of the income

received or receivable for the account of the relevant Sub-

fund in respect of that period, and deducting the charges

and expenses of the relevant Sub-fund paid or payable out

of income in respect of that accounting period. The ACD

then makes such other adjustments as it considers

appropriate (and after consulting the auditor as

appropriate) in relation to taxation, income equalisation,

income unlikely to be received within 12 months following

the relevant income allocation date, income which should

not be accounted for on an accrual basis because of lack

of information as to how it accrues, transfers between the

income and capital account and any other adjustments

which the ACD considers appropriate after consulting the

auditor.

The amount initially deemed available in respect of any

one class of Share may be reduced if the income

attributed to another class of Share in the same Sub-fund

is less than the charges applicable to that class of Share.

35.2.5 Income from debt securities is recognised on an effective

yield basis. Effective yield is an income calculation that

takes account of amortisation of any discount or premium

on the purchase price of the debt security over the

remaining life of the security.

35.2.6 Distributions made to the first named joint Shareholder are

as effective a discharge to the Company and the ACD as if

the first named Shareholder had been a sole Shareholder.

35.2.7 Income produced by the Sub-fund’s investments

accumulates during each accounting period. If, at the end

of the accounting year, income exceeds expenses, the net

income of the Sub-fund is available to be distributed to

Shareholders. In order to conduct a controlled dividend

flow to Shareholders, interim distributions will be, at the

investment manager’s discretion, up to a maximum of the

distributable income available for the period. All remaining

income is distributed in accordance with the Regulations.

35.2.8 Where a Sub-fund does not issue Accumulation Shares, a

shareholder may choose to have the income reinvested to

purchase further shares of that Sub-fund. Where the

reinvestment of income has been permitted, the ACD will

waive any initial charge due on such re-investment. Re-

investment of allocations of income is made fourteen days

before the relevant income allocation date.

35.3 Annual Reports

35.3.1 Annual reports of the Company are published within four

months of each annual accounting period and half-yearly

reports are published within two months of each half-yearly

accounting period and are available to Shareholders on

request. Shareholders will receive copies of the annual and

half-yearly short reports on publication.

35.3.2 Investors who hold Euro, or Sterling where available,

Share Classes through M&G International Investments

Nominees Limited will receive copies of the annual and

half-yearly reports for the Company on publication.

35.3.3 The accounts of the Company presented within annual and

half-yearly aggregate reports will be in presented in its Base

Currency. The accounts of Sub-funds presented within

annual and half-yearly reports will be shown in the Valuation

Currency of that Sub-fund. The Valuation Currency of each

Sub-fund is listed in Appendices 1 and 4.

35.4 Documents of the Company

Investors in Euro Share Classes should refer also to

Appendix 4

35.4.1 The following documents may be inspected free of charge

between 9.00 am and 5.00 pm UK time every Dealing Day

at the offices of the ACD at Laurence Pountney Hill,

London EC4R 0HH:

35.4.1.1 the most recent annual and half-yearly

reports of the Company;

35.4.1.2 the Instrument of Incorporation (and any

amending instrument of incorporation).

35.4.1.3 Shareholders may obtain copies of the

above documents from the above

addresses. The ACD may make a charge at

its discretion for copies of certain

documents;

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35.5 Risk Management and Other Information

The following information is available from the ACD on request;

35.5.1 Information on the risk management methods used in

relation to the Sub-funds, the quantitative limits which apply

to that risk management and any developments in the risk

and yields of the main categories of investment.

35.5.2 Execution Policy

The Investment Manager’s execution policy sets out the

basis upon which the ACD will effect transactions and

place orders in relation to the Company whilst complying

with its obligations under the FCA Handbook to obtain the

best possible result for the ACD on behalf of the Company.

35.5.3 Exercise of voting rights

A description of the Investment Manager’s strategy for

determining how voting rights attached to ownership of

Scheme Property are to be exercised for the benefit of

each sub-Fund. Details of action taken in respect of the

exercise of voting rights are also available.

35.6 Management of collateral

In the context of OTC financial derivatives transactions and efficient portfolio

management techniques, each Sub-Fund may receive collateral with a view

to reduce its counterparty risk. This section sets out the collateral

management applied by the Sub-Funds in such cases.

35.6.1 Eligible collateral

Collateral received by the Sub-Funds may be used to

reduce their counterparty risk exposure if it complies with

the criteria set out in regulation notably in terms of liquidity,

valuation, issuer credit quality, correlation, risks linked to

the management of collateral and enforceability.

In particular, collateral should comply with the following

conditions:

35.6.1.1 Any collateral received other than cash

should be of high quality, highly liquid and

traded on a regulated market or multilateral

trading facility with transparent pricing in

order that it can be sold quickly at a price

that is close to pre-sale valuation;

35.6.1.2 It should be valued on at least a daily basis

and assets that exhibit high price volatility

should not be accepted as collateral unless

suitably conservative haircuts are in place;

35.6.1.3 It should be issued by an entity that is

independent from the counterparty and is

expected not to display a high correlation

with the performance of the counterparty;

35.6.1.4 It should be sufficiently diversified in terms

of country, markets and issuers with a

maximum exposure of 20% of the Sub-

Funds’ net asset value to any single issuer

on an aggregate basis, taking into account

all collateral received;

35.6.1.5 It should be capable of being fully enforced

by the Sub-Funds at any time without

reference to or approval from the

counterparty.

Subject to the abovementioned conditions, collateral received by the Sub-

Funds may consist of:

35.6.1.6 liquid assets such as cash and cash

equivalents, including short-term bank

certificates and Money Market Instruments;

35.6.1.7 bonds issued or guaranteed by a Member

State of the OECD or by their local public

authorities or by supranational institutions

and undertakings with EU, regional or

worldwide scope ;

35.6.1.8 shares or units issued by money market

Collective investment Schemes calculating

a daily NAV and being assigned a rating of

AAA or its equivalent ;

35.6.1.9 shares or units by UCITS investing mainly

in bonds/shares mentioned in (e) and (f)

below,

35.6.1.10 bonds issued or guaranteed by first class

issuers offering an adequate liquidity; and

35.6.1.11 shares admitted to or dealt in on a regulated

market of an EU Member State or on a

stock exchange of a member state of the

OECD, on the condition that these shares

are included in a main index.

A reinvestment of cash provided as

collateral may only be effected where in

compliance with the respective regulations.

35.6.2 Level of collateral

Each Sub-Fund will determine the required level of

collateral for OTC financial derivatives transactions and

efficient portfolio management techniques by reference to

the applicable counterparty risk limits and taking into

account the nature and characteristics of transactions, the

creditworthiness and identity of counterparties and

prevailing market conditions.

35.6.3 OTC financial derivative transactions

The Investment Manager will generally require the

counterparty to an OTC derivative to post collateral in

favour of the Sub-Fund representing, at any time during the

lifetime of the agreement, up to 100% of the Sub-Fund’s

exposure under the transaction.

35.6.4 Haircut policy

Collateral acceptability and haircuts will depend on a

number of factors including the asset pool available to the

Sub-Fund for posting as well as the asset types acceptable

to the Sub-Fund when receiving collateral, but will as a rule

be of high quality, liquid and not display significant

correlation with the counterparty under normal market

conditions.

The taking of collateral is intended as a hedge against

default risk, with haircuts seen as hedging the risk on that

collateral. From this point of view, haircuts are an

adjustment to the quoted market value of a collateral

security to take account of the unexpected loss that may

be faced due to the difficulty in realising that security in

response to a default by the counterparty. By applying a

haircut, the quoted market value of a collateral security is

translated into a probable future liquidation or restoration

value.

To this end therefore the haircuts that are applied are the

result of a view of the credit and liquidity risk of the

collateral and will become more “aggressive” depending on

the asset type and maturity profile.

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As at the date of this Prospectus, the Investment Manager typically

accepts the following collateral types and applies the

following haircuts in relation thereto:

Collateral type Typical haircut

Cash 0%

Government Bonds 1% to 20%

Corporate Bonds 1% to 20%

The Investment Manager reserves the right to depart from

the above haircut levels where it would be appropriate to do

so, taking into account the assets’ characteristics (such as

the credit standing of the issuers, the maturity, the currency

and the price volatility of the assets). Furthermore, the

Investment Manager reserves the right to accept collateral

types other than those disclosed above.

No haircut will generally be applied to cash collateral.

35.6.5 Reinvestment of collateral

Non-cash collateral received by the Fund on behalf of a

Sub-Fund cannot be sold, reinvested or pledged, except

where and to the extent permissible under regulations.

Cash collateral received by the Sub-Funds can only be:

35.6.5.1 placed on deposit with credit institutions

which have their registered office in an EU

Member State or, if their registered office is

located in a third-country, are subject to

prudential rules considered by the FCA as

equivalent to those laid down in EU law;

35.6.5.2 invested in high-quality government bonds;

35.6.5.3 used for the purpose of reverse repo

transactions provided the transactions are

with credit institutions subject to prudential

supervision and the relevant Sub-Fund is

able to recall at any time the full amount of

cash on accrued basis; and/or

35.6.5.4 invested in short-term money market funds

as defined in the ESMA Guidelines on a

common definition of European Money

Market Funds.

Any reinvestment of cash collateral should

be sufficiently diversified in terms of

country, markets and issuers with a

maximum exposure, on an aggregate

basis, of 20% of the Sub-Fund’s Net Asset

Value to any single issuer. The Sub-Fund

may incur a loss in reinvesting the cash

collateral it receives. Such a loss may arise

due to a decline in the value of the

investment made with cash collateral

received. A decline in the value of such

investment of the cash collateral would

reduce the amount of collateral available to

be returned by the Sub-Fund to the

counterparty at the conclusion of the

transaction. The Sub-Fund would be

required to cover the difference in value

between the collateral originally received

and the amount available to be returned to

the counterparty, thereby resulting in a loss

to the Sub-Fund.

35.7 Notices

Notices to Shareholders will normally be given in writing to the

Shareholder’s registered address (or, at the discretion of the ACD,

such other address which we may hold for the purposes of

correspondence).

36 Complaints

If you wish to complain about any aspect of the service you have

received or to request a copy of M&G’s complaints handling

procedures, please contact M&G Customer Relations, PO Box

9039, Chelmsford CM99 2XG. If your complaint is not dealt with to

your satisfaction, you can then complain to: The Financial

Ombudsman Service (FOS), Exchange Tower, London, E14 9SR.

37 Tax Reporting

37.1 In order to fulfill our legal obligations, we are required to obtain

confirmation of the tax residency of Shareholders, and may ask for

evidence of the tax identification number, and country and date of

birth of individual Shareholders, or for the Global Intermediary

Identification Number (GIIN) of corporate Shareholders. If certain

conditions apply, information about your shareholding may be

passed to HM Revenue & Customs in order to be passed on to

other tax authorities. For the purposes of the European Savings

Directive such information will be passed to HM Revenue &

Customs where you sell Shares in the Sub-fund where it has

invested more than 25% of its assets directly or indirectly in money

debts, or where distributions are paid out by the Sub-fund which has

invested more than 15% of its assets in money debts.

37.2 Where investors hold Shares through M&G International

Investments Nominees Limited, similar details to those mentioned

above will be requested. Until 2015, you will be given options

relating to withholding tax or disclosure of information to the

Luxembourg tax authorities where applicable. Further information

will be made available to you when you apply for Shares.

38 Marketing outside the UK

38.1 The Company’s Shares are marketed outside the UK. Paying

agents in countries other than the UK where Shares are registered

for retail sale may charge investors for their services.

38.2 The Shares in the Sub-funds have not been and will not be

registered under the United States Securities Act of 1933, as

amended, or registered or qualified under the securities laws of any

state of the United States and may not be offered, sold, transferred

or delivered, directly or indirectly, to any investors within the United

States or to, or for the account of, US Persons except in certain

limited circumstances pursuant to a transaction exempt from such

registration or qualification requirements. None of the Shares have

been approved or disapproved by the US Securities and Exchange

Commission, any state securities commission in the United States

or any other US regulatory authority, nor have any of the foregoing

authorities passed upon or endorsed the merits of the offering of

the Shares or the accuracy or adequacy of the prospectus. The

Sub-funds will not be registered under the United States Investment

Company Act of 1940, as amended.

39 Markets for the Sub-funds

The Sub-funds are marketable to all retail investors.

40 Genuine diversity of ownership

40.1 Shares in the Company are and will continue to be widely available.

The intended categories of investors are retail and institutional

investors.

40.2 Shares in the Company are and will continue to be marketed and

made available widely to reach the intended categories of investors

and in a manner appropriate to attract those categories of investors.

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M&G C

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te B

ond Fund

M&G Euro

pean H

igh Y

ield B

ond Fund

M&G G

lobal G

ove

rnm

ent Bond Fund

M&GFu

nd o

f In

vestm

ent Tru

st Share

s Fu

nd

M&G Reco

very

Fund

M&G Sm

alle

r Com

panies Fu

nd

General risks Risk warning

The investments of the Sub-fund are subject to normal market fluctuations and other risks inherent ininvesting in shares, bonds and other stock market related assets. There can be no assurance that anyappreciation in value of investments will occur or that the investment objective will actually be achieved.The value of investments and the income from them will fall as well as rise and investors may not recoupthe original amount they invested. Past performance is not a guide to future performance.

Risk to capital & Income will vary ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Whilst the Investment Manager will place transactions, hold positions (including OTC derivatives) anddeposit cash with a range of counterparties, there is a risk that a counterparty may default on itsobligations or become insolvent, which may put the Sub-fund's capital at risk.

Counterparty Risk ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

The Sub-fund’s investments may be subject to liquidity constraints which mean that securities maytrade infrequently and in small volumes. Normally liquid securities may also be subject to periods ofsignificantly lower liquidity in difficult market conditions. As a result, changes in the value of investmentsmay be more unpredictable and in certain cases, it may be difficult to trade in a security at the lastmarket price quoted or at a value considered to be fair.

Liquidity Risk ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Investors are reminded that in exceptional circumstances their right to sell or redeem Shares may betemporarily suspended.

Suspension of dealing in shares ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

When cancellation rights are applicable and are exercised, the full amount invested may not be returnedif the price falls before we are informed of your intention to cancel.

Cancellation Risks ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

A change in the rate of inflation will affect the real value of your investment.Inflation ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

The tax regulations which M&G Sub-funds are subject to constantly change as a result of (i) technicaldevelopments – changes in law regulations; (ii) interpretative developments – changes in the way taxauthorities apply law and (iii) market practice – whilst tax law is in place, there may be difficultiesapplying the law in practice (e.g. due to operational constraints).

Any changes to the tax regimes applicable to M&G funds and investors in their country of residence ordomicile may impact negatively on the returns received by investors.

Tax developments ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

The current tax regime applicable to UK investors in collective investment schemes in their country ofresidence or domicle and the UK schemes themselves is not guaranteed and may be subject to change.Any changes may have a negative impact on returns received by investors.

The M&G funds rely extensively on tax treaties to reduce domestic rates of withholding tax in countireswhere it invests. A risk exists that the tax authorities in countries with which the United Kingdom hasdouble tax treaties may, change their position on the applciation of the relevant tax treaty. As aconsequence, higher tax may be suffered on investments (e.g. as a result of the imposition ofwithholding tax in that foreign jurisdiction). Accordingly, any such withholding tax may impinge uponthe returns to the Sub-fund and investors.

In specific treaties which contain ‘limitation of benefits’ provisions (e.g US), the tax treatment of theSub-fund may be affected by the tax profiles of investors in the fund as such treaties may require themajority of investors in the fund to be from the same jurisdicdtion. Failing to meet the limitation ofbenefits provision may result in increased withholding tax being suffered by the Sub-fund.

Taxation ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Risk factors


22

41 Risk factors

M&G C

orp

ora

te B

ond Fund

M&G D

ivid

end Fund

M&G Em

erg

ing M

arkets B

ond

Fund

M&G Euro

pean C

orp

ora

te B

ond Fund

M&G Euro

pean H

igh Y

ield B

ond Fund

M&G G

lobal G

ove

rnm

ent Bond Fund

M&GFu

nd o

f In

vestm

ent Tru

st Share

s Fu

nd

M&G Reco

very

Fund

M&G Sm

alle

r Com

panies Fu

nd

Derivatives Risk warning

Correlation risk is the risk of loss due to divergence between two rates or prices. This applies particularlywhere an underlying position is hedged through derivative contracts which are not the same as (butmay be similar to) the underlying position.

Derivatives - correlation (Basis risk) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Valuation risk is the risk of differing valuations of derivatives arising from different permitted valuationmethods. Many derivatives, in particular non-exchange traded (“OTC”) derivatives, are complex andoften valued subjectively and the valuation can only be provided by a limited number of marketprofessionals who are often also the counterparty to the transaction. As a result, the daily valuation maydiffer from the price that can actually be achieved when trading the position in the market.

Derivatives - Valuation ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Liquidity risk exists when a particular instrument is difficult to purchase or sell. Derivative transactionsthat are particularly large, or traded off market (i.e. over the counter), may be less liquid and thereforenot readily adjusted or closed out. Where it is possible to buy or sell, this may be at a price that differsfrom the price of the position as reflected in the valuation.

Derivatives - Liquidity ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Certain derivative types may require the establishment of a long term exposure to a single counterpartywhich increases the risk of counterparty default insolvency. While these positions are collateralised, thereis a residual risk between both the mark to market and the receipt of the corresponding collateral aswell as between the final settlement of the contract and the return of any collateral amount, this risk isreferred to as daylight risk. In certain circumstances, the physical collateral returned may differ from theoriginal collateral posted. This may impact the future returns of the Sub-fund.

Derivatives - Counterparty ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

The Sub-fund’s ability to settle derivative contracts on their maturity may be affected by the level ofliquidity in the underlying asset. In such circumstances, there is a risk of loss to the Sub-fund.

Derivatives - Delivery ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Derivative transactions are typically undertaken under separate legal arrangements. In the case of overthe counter (“OTC”) derivatives, a standard International Swaps and Derivatives Association (ISDA)agreement is used to govern the trade between the sub-fund and the counterparty. The agreementcovers situations such as a default of either party and also the delivery and receipt of collateral.

As a result, there is a risk of loss to the Sub-Fund where liabilities in those agreements are challenged ina court of law.

It is not intended nor anticipated that the use of these derivative instruments will have a materialimpact on the risk profile or volatility of the Sub-fund. Extreme market events, counterparty default orinsolvency may, however, result in loss to the Sub-fund.

Legal risk ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

The Sub-fund undertakes transactions in derivatives and forward transactions, both on exchange andover the counter (OTC), for the purposes of meeting the investment objective, protecting the risk tocapital, currency, duration and credit management, as well as for hedging.

The Risk Management Process document sets out the approved derivative strategies.

Derivatives (sophisticated funds) ✓ ✓ ✓ ✓ ✓

The Sub-fund may enter into derivative transactions for the purposes of efficient portfolio management(‘EPM’), including hedging transactions and temporary short term tactical asset allocation,. e.g. for thepurposes of preserving the value of an asset or assets of the Sub-fund and for liquidity managementpurposes (i.e. to enable the Sub-fund to be adequately invested). The Risk Management Processdocument sets outthe approved strategies.

Derivatives EPM only ✓ ✓ ✓ ✓

Derivatives - Volatility (i)

Risk factors


23

M&G C

orp

ora

te B

ond Fund

M&G D

ivid

end Fund

M&G Em

erg

ing M

arkets B

ond

Fund

M&G Euro

pean C

orp

ora

te B

ond Fund

M&G Euro

pean H

igh Y

ield B

ond Fund

M&G G

lobal G

ove

rnm

ent Bond Fund

M&GFu

nd o

f In

vestm

ent Tru

st Share

s Fu

nd

M&G Reco

very

Fund

M&G Sm

alle

r Com

panies Fu

nd

Derivatives Risk warning

Derivatives may be used to generate market exposure to investment exceeding the net asset value ofthe Sub-fund. It is anticipated that the use of these derivative instruments will not have a materialimpact on the risk profile or volatility of the Sub-fund as measured against equivalent bond funds whereinvestment in derivatives is not permitted.

Derivatives - Volatility (ii) ✓ ✓ ✓ ✓ ✓

Derivatives may be used in a limited way to generate credit exposure to investments exceeding the netasset value of the Sub-fund, thereby exposing the Sub-fund to a higher degree of risk. As a result ofincreased market exposure, the size of any positive or negative movement in markets will have arelatively larger effect on the net asset value of the Sub-fund. The additional credit exposure willhowever be limited to such an extent as to not materially increase the overall volatility of the net assetvalue.

Limited Credit leverage ✓

The Sub-fund may take short positions through the use of derivatives which are not backed byequivalent physical assets. Short positions reflect an investment view that the price of the underlyingasset is expected to fall in value. Accordingly, if this view is incorrect and the asset rises in value, theshort position could involve losses of the Sub-fund's capital due to the theoretical possibility of anunlimited rise in their market price. However, shorting strategies are actively managed by theInvestment Manager such that the extent of the losses will be limited.

Short Sales ✓ ✓ ✓ ✓ ✓

Funds which use currency management strategies may have substantially altered exposures to currencyexchange rates. Should these currencies not perform as the Investment Manager expects, the strategymay have a material negative effect on performance.

Currency Strategies ✓ ✓

Risk factors


24

M&G C

orp

ora

te B

ond Fund

M&G D

ivid

end Fund

M&G Em

erg

ing M

arkets B

ond

Fund

M&G Euro

pean C

orp

ora

te B

ond Fund

M&G Euro

pean H

igh Y

ield B

ond Fund

M&G G

lobal G

ove

rnm

ent Bond Fund

M&GFu

nd o

f In

vestm

ent Tru

st Share

s Fu

nd

M&G Reco

very

Fund

M&G Sm

alle

r Com

panies Fu

nd

Fund specific Risk warning

Securities markets in emerging market countries are generally not as large as those in more developedeconomies and have substantially less dealing volume which can result in lack of liquidity.

Accordingly, where a Sub-Fund invests substantially in securities listed or traded in such markets, its netasset value may be more volatile than a fund that invests in the securities of companies in developedcountries.

Substantial limitations may exist in certain countries with respect to repatriation of investment incomeor capital or the proceeds of sale of securities by to foreign investors or by restriction on investment, allof which could adversely affect the Sub-Fund.

Many emerging markets do not have well developed regulatory systems and disclosure standards. Inaddition, accounting, auditing and financial reporting standards, and other regulatory practices anddisclosure requirements (in terms of the nature, quality and timeliness of information disclosed toinvestors) applicable to companies in emerging markets are often less rigorous than in developedmarkets. Accordingly, investment opportunities may be more difficult to properly assess.

Adverse market and political conditions arising in a specific emerging market country may spread toother countries within the region.

Political risks and adverse economic circumstances (including the risk of expropriation andnationalisation) are more likely to arise in these markets, and could spread to other emerging marketsin the region, putting the value of the investment at risk.

Emerging Markets ✓ ✓

Sub-funds investing in specific countries, regions, sectors and asset classes may be more volatile andcarry a higher risk to capital than funds investing in a broader investment universe. This is because theformer are more vulnerable to market sentiment specific to the country region/sector/asset class inwhich they invest compared with the latter which may be invested across several regions, sectors andasset classes.

Funds investing in a specificcountries, regions, sectors andassets classes

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Currency exchange rate fluctuations will impact the value of a Sub-Fund which holds currencies or assetsdenominated in currencies that differ from the valuation currency of the Sub-fund.

Currency & exchange rate risk ✓ ✓ ✓ ✓ ✓ ✓ ✓

Currency exchange rate fluctuations will impact the value of a unhedged share classes where thecurreny of the share class differs from that of the valuation currency of the Sub-fund.

Currency risk on unhedged shareclasses

✓ ✓ ✓ ✓ ✓ ✓ ✓

Although the Investment Manager seeks to provide a growing income over the long term there is a riskthat this will not be achieved.

Growing income not guaranteed ✓

Interest rate fluctuations will affect the capital and income value of investments within Sub-funds thatinvest substantially in fixed income investments. This effect will be more apparent if the Sub-fund holdsa significant proportion of its portfolio in long dated securities.

Interest rate risk ✓ ✓ ✓ ✓ ✓

The value of the Sub-fund will fall in the event of the default or perceived increased credit risk of anissuer. This is because the capital and income value and liquidity of the investment is likely to decrease.AAA rated government and corporate bonds have a relatively low risk of default compared to non-investment grade bonds. However, the ratings are subject to change and they may be downgraded. Thelower the rating the higher the risk of default.

Credit Risk ✓ ✓ ✓ ✓ ✓

The costs of using derivatives to implement a short position within a Sub-fund, for example shortpositions in currency or Government bonds, may result in a zero or negative yield on the portfolio. Insuch circumstances the Sub-fund may not make any distributions and any shortfall will be met fromcapital.

Zero or Negative yield ✓ ✓ ✓ ✓ ✓

Risk factors


25

M&G C

orp

ora

te B

ond Fund

M&G D

ivid

end Fund

M&G Em

erg

ing M

arkets B

ond

Fund

M&G Euro

pean C

orp

ora

te B

ond Fund

M&G Euro

pean H

igh Y

ield B

ond Fund

M&G G

lobal G

ove

rnm

ent Bond Fund

M&GFu

nd o

f In

vestm

ent Tru

st Share

s Fu

nd

M&G Reco

very

Fund

M&G Sm

alle

r Com

panies Fu

nd


The Investment Manager will undertake hedging transactions to reduce the effect of exchange ratefluctuations between the currency of the hedge share classes and the US Dollar.

✓

The Investment Manager will undertake hedging transactions to reduce the effect of exchange ratefluctuations between the currency of the hedge share classes and the Euro.

✓ ✓

There is a risk that one or more countries will exit the Euro and re-establish their own currencies. In lightof this uncertainty or in the event that this does occur, there is an increased risk of volatility in assetvalues, liquidity and default risk. In addition, there is a risk that disruption in Eurozone markets couldgive rise to difficulties in valuing the assets of the Sub-fund. In the event that it is not possible to carryout an accurate valuation of the Sub-fund, dealing may be temporarily suspended.

Eurozone ✓ ✓ ✓ ✓ ✓ ✓

The Sub-fund invests/or can invest in securities denominated in Euros. Economic uncertainties facing theEurozone mean that there is an increased risk of volatility in asset values, liquidity and default risk. Inaddition, there is a risk that disruption in Eurozone markets could give rise to difficulties in valuing theassets of the Fund. In the event that it is not possible to carry out an accurate valuation of the Fund,dealing may be temporarily suspended.

Exposure to Euro ✓

Shareholders are not liable for the debts of the Sub-fund. A Shareholder is not liable to make any furtherpayment to the Sub-fund after he has paid in full for the purchase of Shares.

Liabilities of the Fund ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

On occasions, the Investment Manager may make an investment with a view to securing a particulardividend to enhance distributable income. This can act as a constraint on short-term capitalperformance.

Sub-funds buying Dividends ✓

Active equity funds managed with an unconstrained approach will typically have a smaller number ofholdings than funds more closely aligned with the benchmark index. When funds are concentrated in asmall number of holdings the funds' returns may be more volatile and/or influenced materially by asmall number of large holdings.

Concentrated portfolios ✓ ✓ ✓ ✓

Gains or losses arising from currency hedging transactions are borne by the Shareholders of therespective hedged Share Classes. Given that there is no segregation of liabilities between Share Classes,there is a risk that, under certain circumstances, the settlement of currency hedging transactions or therequirement for collateral (if such activity is collateralised) in relation to one Share Class could have anadverse impact on the net asset value of the other Share Classes in issue.

Hedged Share classes - nosegregation of liabilities betweenshare classes in a fund

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

The Investment Manager will undertake transactions specifically to reduce the exposure of holders ofhedged Share Classes to movements in the material currencies within a fund’s portfolio (look through)or to movements in the reference currency, base or valuation currency of the Sub-fund (replication). Thehedging strategy employed will not completely eliminate the exposure of the hedged Share Classes tocurrency movements and no assurance can be given that the hedging objective will be achieved.Investors should be aware that the hedging strategy may substantially limit Shareholders of therelevant hedged Share Class from benefiting if the hedged Share Class currency falls against thereference currency. Notwithstanding the hedging of the Share Classes described above, Shareholders inthose Share Classes may still be exposed to an element of currency exchange rate risk.

During periods when interest rates across currency areas are very similar, the interest rate differential(IRD) is very small, the impact on hedged share class returns is low. However, in an environment whereinterest rates are significantly different between the Sub-fund’s exposure currency and the hedgedshare class currency, the IRD will be higher and the performance difference will be greater.

Hedged share class implications forspecific share class ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Risk factors


26

M&G C

orp

ora

te B

ond Fund

M&G D

ivid

end Fund

M&G Em

erg

ing M

arkets B

ond

Fund

M&G Euro

pean C

orp

ora

te B

ond Fund

M&G Euro

pean H

igh Y

ield B

ond Fund

M&G G

lobal G

ove

rnm

ent Bond Fund

M&GFu

nd o

f In

vestm

ent Tru

st Share

s Fu

nd

M&G Reco

very

Fund

M&G Sm

alle

r Com

panies Fu

nd


Shareholders using the Regular Redemption Facility should note that such redemptions are treated asdisposals for the purposes of Capital Gains Tax. Shareholders should also note that where the annualpercentage growth in value of their holding is less than the annual percentage value being redeemedusing the Regular Redemption Facility, they will in effect be eroding the capital value of their originalinvestment.

Regular Redemption Facility ✓

The Sub-fund's charges and expenses are taken from capital, in whole or in part, and as a result thecapital growth will be constrained.

Charges to Capital ✓

Cash or money market instruments held in the sub funds are subject to the prevailing interest rates inthe specific currency of the asset. There may be situations where the interest rate environment resultsin rates turning negative. In such situations the sub fund may have to pay to have money on deposit orhold the money market instrument.

Negative interest rates ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Whilst the Instrument of Incorporation provides for segregated liability between the Sub-funds, theconcept of segregated liability may not be recognised and given effect by a court in certain contextsincluding where relevant contractual documents involving the Sub-funds are not construed in a mannerto provide segregated liability. Where claims are brought by local creditors in foreign courts or underforeign contracts, and the liability relates to one Sub-fund which is unable to discharge its liability, it isnot clear whether a foreign court would give effect to the segregated liability contained in theInstrument of Incorporation. Therefore, it is not possible to be certain that the assets of a Sub-fund willalways be completely insulated from the liabilities of another Sub-fund of the Company in everycircumstance.

Protected cell - Foreign courts ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Risk factors


27

28

1.1 M&G Corporate Bond Fund.

Investment Objective

The Fund aims to achieve a higher total return (the combination of income

and growth of capital) from investment than would be obtainable in UK

government fixed interest securities (ie gilts) of similar maturities.

Investment Policy

The Fund invests mainly in sterling denominated corporate debt instruments.

The Fund’s exposure to corporate debt may be gained through the use of

derivatives. Any currency exposures within the Fund may be managed by

currency hedges into sterling. The Fund may also invest in other assets

including collective investment schemes, other transferable securities and

other debt instruments (including corporate debt and government and public

securities denominated in any currency), cash and near cash, deposits,

warrants, money market instruments and other derivative instruments.

Accounting reference date: 30 June

Income allocation date: On or before 31 October (Final); 31 January(Interim); 30 April (Interim); 31 July (Interim)

Share classes/types in issue or availablefor issue*: Sterling Class A – Net Accumulation & Net

Income

Sterling Class X – Net Accumulation and NetIncome

Sterling Class R – Net Accumulation and NetIncome

Sterling Class I – Net Accumulation and NetIncome

Sterling Class C – Net Accumulation and NetIncome

Investment minima

Lump sum initial investment Class A: £500

Class X: £500

Class R: £500

Class I: £500,000

Class C: £500,000

Lump sum subsequent investment Class A: £100

Class X: £100

Class R: £100

Class I: £10,000

Class C: £25,000

Lump sum holding Class A: £500

Class X: £500

Class R: £500

Class I: £500,000

Class C: £500,000

Regular saving (per month) Class A: £10

Class X: £10

Class R: £10

Class I: n/a

Class C: n/a

Redemption Class A: £100

Class X: £100

Class R: £100

Class I: £10,000

Class C: £25,000

Charges and Expenses

Initial charge Class A: 3%

Class X: nil

Class R: 1%

Class I: 1%

Class C: -

Redemption charge Class A: n/a

Class X: 4.5%#

Class R: n/a

Class I: n/a

Class C: n/a

Annual Management Charge Class A: 1%

Class X: 1.25%

Class R: 0.75%

Class I: 0.5%

Class C: -

Administration Charge Class A: 0.15%

Class X: 0.15%

Class R: 0.15%

Class I: 0.15%

Class C: 0.15%

Depositary Charge See section 29.4

Custody Charge See section 29.5

Custody Transaction Charges See section 29.6

Please note the above Charges and Expenses section is a summary and

does not set out all charges and expenses payable by the Sub-funds. For

further detail and an explanation of the terms used, please see section 29

above.

Allocation of Charges

Annual Management Charge 100% to Income

Administration Charge 100% to Income

Share Class Hedging Charge N/A

Depositary’s Charge 100% to Income

Annual Custody Charge 100% to Income

Custody Transaction Charges 100% to Capital

Expenses 100% to Income

Portfolio Transaction Charges 100% to Capital

Investor Profile

The fund is suitable for retail and institutional investors seeking to gain a

combination of income and growth of capital from a portfolio of mainly

sterling denominated corporate debt instruments over the long term, but who

appreciate that their capital will be at risk and that the value of their

investment and any derived income may fall as well as rise.

Investment Manager: M&G Investment Management Limited

Valuation point: 12.00 noon UK time

Launch date: 7 March 2002

Valuation Currency: Sterling

* Please see www.mandg.com/classesinissue for details of which share classes

are currently being issued.

# Please see paragraph 16.2 for details.

APPENDIX 1 -


IF3/10152014/ENG/r01

29

1.2 M&G Dividend Fund.

Investment objective and policy

The Fund invests mainly in a range of UK equities with the aim of achieving

a steadily increasing income stream. The Fund will target a yield higher than

that of the FTSE All-Share Index. Subject to this, the aim will be to maximise

total return (the combination of income and growth of capital).


Income allocation date: On or before 31 October (Final); 30 April (Interim)

Share classes/types in issue or availablefor issue*: Sterling Class A – Net Accumulation and Net

Income


Sterling Class R – Net Accumulation and Netincome


Sterling Class C – Net Income

Investment minima


Class X: £500

Class R: £500

Class I: £500,000

Class C: £500,000


Class X: £100

Class R: £100

Class I: £10,000

Class C: £25,000


Class X: £500

Class R: £500

Class I: £500,000

Class C: £500,000


Class X: £10

Class R: £10

Class I: n/a

Class C: n/a


Class X: £100

Class R: £100

Class I: £10,000

Class C: £25,000



Class X: nil

Class R: 1%

Class I: 1%

Class C: nil


Class X: 4.5%#

Class R: n/a

Class I: n/a

Class C: n/a

Annual Management Charge Class A: 1.5%

Class X: 1.5%

Class R: 1.0%

Class I: 0.75%

Class C: nil


Class X: 0.15%

Class R: 0.15%

Class I: 0.15%

Class C: 0.15%





Annual Management Charge 100% to Capital

Administration Charge 100% to Capital


Depositary’s Charge 100% to Capital

Annual Custody Charge 100% to Capital


Expenses 100% to Capital





above.

Investor Profile


steadily growing income stream from a portfolio of mainly UK equities over

the long term, but who appreciate that their capital will be at risk and that the

value of their investment and any derived income may fall as well as rise.








APPENDIX 1 -


IF3/10152014/ENG/r01

30

1.3 M&G Emerging Markets Bond Fund.


The Fund aims to maximise total return (the combination of income and

growth of capital)

Investment Policy

The Fund invests mainly in debt instruments issued by emerging market

borrowers, including government, government agency and corporate debt.

There are no restrictions on the currencies to which the Fund may be

exposed. Derivatives may be used for investment purposes as well as for

efficient portfolio management. The Fund may also invest in collective

investment schemes, other transferable securities (including other debt

instruments), cash and near cash, deposits, warrants and money market

instruments. M&G has the discretion to identify the countries that it considers

to qualify as emerging markets although these will typically be those that the

IMF or World Bank define as emerging or developing economies.




Income

Sterling Class A-H (hedged) – Net Accumulationand Net Income



Sterling Class R-H (hedged) – Net Accumulationand Net Income


Sterling Class I-H (hedged) – Net Accumulationand Net Income


Investment minima


Class A-H: £500

Class X: £500

Class R: 500

Class R-H: £500

Class I: £500,000

Class I-H: £500,000

Class C: £500,000


Class A-H: £100

Class X: £100

Class R: £100

Class R-H: £100

Class I: £10,000

Class I-H: £10,000

Class C: £25,000


Class A-H: £500

Class X: £500

Class R: £500

Class R-H: £500

Class I: £500,000

Class I-H: £500,000

Class C: £500,000


Class A-H: £10

Class X: £10

Class R: £10

Class R-H: £10

Class I: n/a

Class I-H: n/a

Class C: n/a


Class A-H: £100

Class X: £100

Class R: £100

Class R-H: £100

Class I: £10,000

Class I-H: £10,000

Class C: £25,000



Class A-H: 3%

Class X: nil

Class R: 1%

Class R-H: 1%

Class I: 1%

Class I-H: 1%

Class C: -

APPENDIX 1 -


IF3/10152014/ENG/r01

31


Class A-H: n/a

Class X: 4.5%#

Class R: n/a

Class R-H: n/a

Class I: n/a

Class I-H: n/a

Class C: n/a


Class A-H: 1.25%

Class X: 1.25%

Class R: 1.00%

Class R-H: 1.00%

Class I: 0.75%

Class A-H: 0.75%

Class C: -


Class A-H: 0.15%

Class X: 0.15%

Class R: 0.15%

Class R-H: 0.15%

Class I: 0.15%

Class A-H: 0.15%

Class C: 0.15%




ACD’s share class hedging fee Class A-H: 0.01% to 0.055%

Class R-H: 0.01% to 0.055%

Class I-H: 0.01% to 0.055%













above.

Investor Profile


combination of income and growth of capital from a portfolio of mainly debt

instruments issued by emerging market borrowers over the long term, but

who appreciate that their capital will be at risk and that the value of their









APPENDIX 1 -


IF3/10152014/ENG/r01

32

1.4 M&G European Corporate Bond Fund.



growth of capital) while generating a higher level of income than that from

European government bonds of similar maturities.

Investment Policy

The Fund invests mainly in investment grade corporate bonds denominated

in any European currency. The Fund may also invest in high yield corporate

bonds, government and public securities denominated in any European

currency. The Fund’s exposure to bonds, government and other public

securities may be gained through the use of derivatives. The Fund may also

invest in other assets, including collective investment schemes, other

transferable securities, cash and near cash, deposits, warrants, money

market instruments and other derivative instruments which may be

denominated in any major global currency. Any non-European currency

exposures within the Fund may be managed by currency hedges in

European currencies.




Income








Investment minima


Class A-H: £500

Class X: £500

Class R: £500

Class R-H: £500

Class I: £500,000

Class I-H: £500,000

Class C: £500,000


Class A-H: £100

Class X: £100

Class R: £100

Class R-H: £100

Class I: £10,000

Class I-H: £10,000

Class C: £25,000


Class A-H: £500

Class X: £500

Class R: £500

Class R-H: £500

Class I: £500,000

Class I-H: £500,000

Class C: £500,000


Class A-H: £10

Class X: £10

Class R: £10

Class R-H: £10

Class I: n/a

Class I-H: n/a

Class C: n/a


Class A-H: £100

Class X: £100

Class R: £100

Class R-H: £100

Class I: £10,000

Class I-H: £10,000

Class C: £25,000



Class A-H: 3%

Class X: nil

Class R: 1%

Class R-H: 1%

Class I: 1%

Class I-H: 1%

Class C: -


Class A-H: n/a

Class X: 4.5%#

Class R: n/a

Class R-H: n/a

Class I: n/a

Class I-H: n/a

Class C: n/a

Annual Management charge Class A: 1%

Class A-H: 1%

Class X: 1.25%

Class R: 0.75%

Class R-H: 0.75%

Class I: 0.5%

Class I-H: 0.5%

Class C:

Administration charge Class A: 0.15%

Class A-H: 0.15%

Class X: 0.15%

Class R: 0.15%

Class R-H: 0.15 %

Class I: 0.15 %

Class I-H: 0.15%

Class C: 0.15%

Depositary charge See section 29.4

Custody charge See section 29.5

Custody Transaction charges See section 29.6


Class R-H: 0.01% to 0.055%

Class I-H: 0.01% to 0.055%

APPENDIX 1 -


IF3/10152014/ENG/r01

33













above.

Investor Profile



investment grade corporate bonds denominated in any European currency

over the long term, but who appreciate that their capital will be at risk and that

the value of their investment and any derived income may fall as well as rise.



Launch date: 13 January 2003





APPENDIX 1 -


IF3/10152014/ENG/r01

34

1.5 M&G European High Yield Bond Fund.



growth of capital) while generating a high level of income.

Investment Policy

The Fund mainly invests in higher yielding debt instruments denominated in

any European currency and will normally be managed to give investors

exposure to European currencies. The Fund’s exposure to higher yielding

debt instruments may be gained through the use of derivatives. The Fund

may also invest in other assets including collective investment schemes,

government and public securities and other transferable securities, cash and

near cash, deposits, warrants, money market instruments and other

derivative instruments which may be denominated in any major global

currency. Any non-European currency exposures within the Fund may be

managed by currency hedges in European currencies.




Income








Investment minima


Class A-H: £500

Class X: £500

Class R: £500

Class R-H: £500

Class I: £500,000

Class I-H: £500,000

Class C: £500,000


Class A-H: £100

Class X: £100

Class R: £100

Class R-H: £100

Class I: £10,000

Class I-H: £10,000

Class C: £25,000


Class A-H: £500

Class X: £500

Class R: £500

Class R-H: £500

Class I: £500,000

Class I-H: £500,000

Class C: £500,000


Class A-H: £10

Class X: £10

Class R: £10

Class R-H: £10

Class I: n/a

Class I-H: n/a

Class C: n/a


Class A-H: £100

Class X: £100

Class R: £100

Class R-H: £100

Class I: £10,000

Class I-H: £10,000

Class C: £25,000



Class A-H: 3%

Class X: nil

Class R: 1%

Class R-H: 1%

Class I: 1%

Class I-H: 1%

Class C: -


Class A-H: n/a

Class X: 4.5%#

Class R: n/a

Class R-H: n/a

Class I: n/a

Class I-H: n/a

Class C: n/a


Class A-H: 1.25%

Class X: 1.25%

Class R: 1.00%

Class R-H: 1.00%

Class I: 0.75%

Class I-H: 0.75%

Class C: -


Class A-H: 0.15%

Class X: 0.15%

Class R: 0.15%

Class R-H: 0.15%

Class I: 0.15%

Class I-H: 0.15%

Class C: 0.15%





Class R-H: 0.01% to 0.055%

Class I-H: 0.01% to 0.055%

APPENDIX 1 -


IF3/10152014/ENG/r01

35













above.

Investor Profile


combination of income and growth of capital whilst generating a high level of

income from a portfolio of mainly higher yielding debt instruments

denominated in any European currency over the long term, but who










APPENDIX 1 -


IF3/10152014/ENG/r01

36

1.6 M&G Fund of Investment Trust Shares.


The portfolio is normally limited to shares of investment trust companies.

These shares provide a wide spread of investment in the UK and overseas

stock markets and are often available at substantial discounts in relation to

underlying asset values. Income is not a major factor, and the yield can be

expected to be slightly less than the average for investment trust companies.




Income



Investment minima


Class X: £500

Class C: £500,000


Class X: £100

Class C: £25,000


Class X: £500

Class C: £500,000


Class X: £10

Class C: n/a


Class X: £100

Class C: £25,000



Class X: nil

Class C: -


Class X: 4.5%#

Class C: n/a


Class X: 1.5%

Class C: -


Class X: 0.15%

Class C: 0.15%
















above.

Investor Profile

The fund is suitable for retail and institutional investors seeking growth of

capital whilst from a portfolio of shares of investment trust companies over

the long term, but who appreciate that their capital will be at risk and that the









APPENDIX 1 -


IF3/10152014/ENG/r01

37

1.7 M&G Global Government Bond Fund.



growth of capital).

Investment Policy

The portfolio will mainly consist of investment grade government debt

securities, including government guaranteed debt securities, and will be

invested on a global basis. The Fund’s exposure to investment grade

government debt may be gained through the use of derivatives. The Fund

may also invest in other government and public securities, collective

investment schemes, other transferable securities, other debt instruments,

cash and near cash, deposits, warrants, money market instruments and

other derivative instruments. The Fund may use derivatives for Efficient

Portfolio Management purposes.




Income




Investment minima


Class R: £500

Class I: £500,000

Class C: £500,000


Class R: £100

Class I: £10,000

Class C: £25,000


Class R: £500

Class I: £500,000

Class C: £500,000


Class R: £10

Class I: n/a

Class C: n/a


Class R: £100

Class I: £10,000

Class C: £25,000


Initial charge Class A: nil

Class R: 1%

Class I: 1%

Class C: nil


Class R: n/a

Class I: n/a

Class C: n/a


Class R: 0.75%

Class I: 0.50%

Class C: -


Class R: 0.15%

Class I: 0.15%

Class C: 0.15%
















above.

Investor Profile



investment grade government debt securities, including government

guaranteed debt securities, over the long term, but who appreciate that their

capital will be at risk and that the value of their investment and any derived

income may fall as well as rise.




Valuation Currency: U.S. Dollar



The Fund was created as a result of the conversion of the M&G International

Sovereign Bond Fund unit trust which had been launched on 4 October

1999. The last significant change to the Fund’s investment objective and/or

investment policy occurred on 1 July 2014, when it was also renamed.

APPENDIX 1 -


IF3/10152014/ENG/r01

38

1.8 M&G Recovery Fund.


The Fund predominantly invests in a diversified range of securities issued by

companies which are out of favour, in difficulty or whose future prospects are

not fully recognised by the market. The sole aim of the Fund is capital

growth. There is no particular income yield target.




Income





Investment minima


Class X: £500

Class R: £500

Class C: £500,000

Class I: £500,000


Class X: £100

Class R: £100

Class C: £25,000

Class I: £10,000


Class X: £500

Class R: £500

Class C: £500,000

Class I: £500,000


Class X: £10

Class R: £10

Class C: n/a

Class I: n/a


Class X: £100

Class R: £100

Class C: £25,000

Class I: £10,000



Class X: nil

Class R: 1%

Class C: nil

Class I: 1%


Class X: 4.5%#

Class R: n/a

Class C: n/a

Class I: n/a


Class X: 1.5%

Class R: 1.0%

Class C: nil

Class I: 0.75%


Class X: 0.15%

Class R: 0.15%

Class C: 0.15%

Class I: 0.15%
















above.

Investor Profile

The fund is suitable for retail and institutional investors seeking to gain growth

of capital from a portfolio of diversified securities issued by companies which

are out of favour, in difficulty or whose future prospects are not fully

recognised by the market, over the long term, but who appreciate that their










APPENDIX 1 -


IF3/10152014/ENG/r01

39

1.9 M&G Smaller Companies Fund.


The Fund invests in smaller companies, where good management can have

most impact on earnings. Investment in such shares can offer prospects of

above average capital growth. Income is not a major factor and the yield can

be expected to be less than that of the FTSE All-Share Index.




Income




Sterling Class C – Net Income

Investment minima


Class X: £500

Class R: £500

Class I: £500,000

Class C: £500,000


Class X: £100

Class R: £100

Class I: £10,000

Class C: £25,000


Class X: £500

Class R: £500

Class I: £500,000

Class C: £500,000


Class X: £10

Class R: £10

Class I: n/a

Class C: n/a


Class X: £100

Class R: £100

Class I: £10,000

Class C: £25,000



Class X: nil

Class R: 1%

Class I: 1%

Class C: nil


Class X: 4.5%#

Class R: n/a

Class I: n/a

Class C: nil


Class X: 1.5%

Class R: 1.0%

Class I: 0.75%

Class C: nil


Class X: 0.15%

Class R: 0.15%

Class I: 0.15%

Class C: 0.15%
















above.

Investor Profile


of capital from a portfolio of securities issued by smaller companies, over the

long term, but who appreciate that their capital will be at risk and that the









APPENDIX 1 -


IF3/10152014/ENG/r01

40

1 The ACD’s investment policy may mean that at

times, where it is considered appropriate, the

property of each Sub-fund will not be fully

invested and that prudent levels of liquidity will

be maintained.

1.1 Treatment of obligations

Where the COLL Sourcebook allows a transaction to be entered

into or an investment to be retained only (for example, investment in

warrants and nil and partly paid securities and the general power to

accept or underwrite) if possible obligations arising out of the

investment transactions or out of the retention would not cause any

breach of any limits in COLL 5, it must be assumed that the

maximum possible liability of the Company under any other of

those rules has also to be provided for.

Where a rule in the COLL Sourcebook permits an investment

transaction to be entered into or an investment to be retained only

if that investment transaction, or the retention, or other similar

transactions, are covered:

1.1.1 it must be assumed that in applying any of those rules,

each Sub-fund must also simultaneously satisfy any other

obligation relating to cover; and

1.1.2 no element of cover must be used more than once.

1.2 UCITS schemes: permitted types of scheme property

The scheme property of a Sub-fund must, except where otherwise

provided by COLL 5, and subject to its investment objective and

policy, consist solely of any or all of:

1.2.1 transferable securities;

1.2.2 approved money-market instruments;

1.2.3 units in collective investment schemes;

1.2.4 derivatives and forward transactions;

1.2.5 deposits; and

1.2.6 movable and immovable property that is necessary for the

direct pursuit of the Company’s business; in accordance

with the rules in COLL 5.2.

1.3 Transferable Securities

1.3.1 A transferable security is an investment falling within article

76 (Shares etc), article 77 (Instruments creating or

acknowledging indebtedness), article 78 (Government and

public securities), article 79 (Instruments giving entitlement

to investments) and article 80 (Certificates representing

certain securities) of the Regulated Activities Order.

1.3.2 An investment is not a transferable security if the title to it

cannot be transferred, or can be transferred only with the

consent of a third party.

1.3.3 In applying paragraph 1.3.2 to an investment which is

issued by a body corporate, and which is an investment

falling within articles 76 (Shares, etc) or 77 (Instruments

creating or acknowledging indebtedness) of the Regulated

Activities Order, the need for any consent on the part of the

body corporate or any members or debenture holders of it

may be ignored.

1.3.4 An investment is not a transferable security unless the

liability of the holder of it to contribute to the debts of the

issuer is limited to any amount for the time being unpaid by

the holder of it in respect of the investment.

2 Investment in transferable securities

2.1 A Sub-fund may invest in a transferable security only to the extent

that the transferable security fulfils the following criteria:

2.1.1 the potential loss which the Sub-fund may incur with

respect to holding the transferable security is limited to the

amount paid for it;

2.1.2 its liquidity does not compromise the ability of the ACD to

comply with its obligation to redeem units at the request of

any qualifying Shareholder (see COLL 6.2.16R(3));

2.1.3 reliable valuation is available for it as follows:

2.1.3.1 in the case of a transferable security

admitted to or dealt in on an eligible market,

where there are accurate, reliable and

regular prices which are either market

prices or prices made available by valuation

systems independent from issuers;

2.1.3.2 in the case of a transferable security not


where there is a valuation on a periodic

basis which is derived from information

from the issuer of the transferable security

or from competent investment research;

2.1.4 appropriate information is available for it as follows:

2.1.4.1 in the case of a transferable security


where there is regular, accurate and

comprehensive information available to the

market on the transferable security or,

where relevant, on the portfolio of the

transferable security;

2.1.4.2 in the case of a transferable security not


where there is regular and accurate

information available to the ACD on the

transferable security or, where relevant, on

the portfolio of the transferable security;

2.1.5 it is negotiable; and

2.1.6 its risks are adequately captured by the risk management

process of the ACD.

2.2 Unless there is information available to the ACD that would lead to

a different determination, a transferable security which is admitted

to or dealt in on an eligible market shall be presumed:

2.2.1 not to compromise the ability of the ACD to comply with its

obligation to redeem units at the request of any qualifying

Shareholder; and

2.2.2 to be negotiable.

2.3 Not more than 5% in value of a Sub-fund is to consist of warrants.

3 Closed end funds constituting transferable

securities

3.1 A unit in a closed end fund shall be taken to be a transferable

security for the purposes of investment by a Sub-fund, provided it

fulfils the criteria for transferable securities set out in paragraph 2,

and either:

3.1.1 where the closed end fund is constituted as an investment

company or a unit trust:

3.1.1.1 it is subject to corporate governance

mechanisms applied to companies; and

3.1.1.2 where another person carries out asset

management activity on its behalf, that

person is subject to national regulation for

the purpose of investor protection; or

APPENDIX 1 -


IF3/10152014/ENG/r01

41

3.1.2 where the closed end fund is constituted under the law of

contract:

3.1.2.1 it is subject to corporate governance

mechanisms equivalent to those applied to

companies; and

3.1.2.2 it is managed by a person who is subject to

national regulation for the purpose of

investor protection.

4 Transferable securities linked to other assets

4.1 A Sub-fund may invest in any other investment which shall be taken

to be a transferable security for the purposes of investment by a

Sub-fund provided the investment:

4.1.1 fulfils the criteria for transferable securities set out in

paragraph 2 above; and

4.1.2 is backed by or linked to the performance of other assets,

which may differ from those in which a Sub-fund can invest.

4.2 Where an investment in 4.1 contains an embedded derivative

component (see COLL 5.2.19R(3A)), the requirements of this

section with respect to derivatives and forwards will apply to that

component.

5 Approved Money Market Instruments

Only M&G Corporate Bond Fund, M&G Emerging Markets Bond

Fund, M&G European Corporate Bond Fund, M&G European High

Yield Bond Fund and M&G Global Government Bond Fund may

invest in money-market instruments.

5.1 An approved money-market instrument is a money-market

instrument which is normally dealt in on the money market, is liquid

and has a value which can be accurately determined at any time.

5.2 A money-market instrument shall be regarded as normally dealt in

on the money market if it:

5.2.1 has a maturity at issuance of up to and including 397 days;

5.2.2 has a residual maturity of up to and including 397 days;

5.2.3 undergoes regular yield adjustments in line with money

market conditions at least every 397 days; or

5.2.4 has a risk profile, including credit and interest rate risks,

corresponding to that of an instrument which has a

maturity as set out in 5.2.1 or 5.2.2 or is subject to yield

adjustments as set out in 5.2.3.

5.3 A money-market instrument shall be regarded as liquid if it can be

sold at limited cost in an adequately short time frame, taking into

account the obligation of the ACD to redeem units at the request of

any qualifying Shareholder (see COLL 6.2.16R(3)).

5.4 A money-market instrument shall be regarded as having a value

which can be accurately determined at any time if accurate and

reliable valuations systems, which fulfil the following criteria, are

available:

5.4.1 enabling the ACD to calculate a net asset value in

accordance with the value at which the instrument held in

the portfolio could be exchanged between knowledgeable

willing parties in an arm’s length transaction; and

5.4.2 based either on market data or on valuation models

including systems based on amortised costs.

5.5 A money-market instrument that is normally dealt in on the money

market and is admitted to or dealt in on an eligible market shall be

presumed to be liquid and have a value which can be accurately

determined at any time unless there is information available to the

ACD that would lead to a different determination.

6 Transferable securities and money market

instruments generally to be admitted or dealt in

on an Eligible Market

6.1 Transferable securities and approved money market instruments

held within a Sub-fund must be:

6.1.1 admitted to or dealt on an eligible market (as described in

paragraphs 7.3.1 or 7.4); or

6.1.2 dealt on an eligible market as described (in paragraph

7.3.2).

6.1.3 for an approved money market instrument not admitted to

or dealt in on an eligible market, within 8.1; or

6.1.4 recently issued transferable securities provided that:

6.1.4.1 the terms of issue include an undertaking

that application will be made to be admitted

to an eligible market; and

6.1.4.2 such admission is secured within a year of

issue.

6.2 However, a Sub-fund may invest no more than 10% of the scheme

property in transferable securities and approved money-market

instruments other than those referred to in 6.1

7 Eligible markets regime: purpose

7.1 To protect investors the markets on which investments of a Sub-

fund are dealt in or traded on should be of an adequate quality

(“eligible”) at the time of acquisition of the investment and until it is

sold.

7.2 Where a market ceases to be eligible, investments on that market

cease to be approved securities. The 10% restriction on investing in

non approved securities applies and exceeding this limit because a

market ceases to be eligible will generally be regarded as an

inadvertent breach.

7.3 A market is eligible for the purposes of the rules if it is:

7.3.1 a regulated market; or

7.3.2 a market in an EEA State which is regulated, operates

regularly and is open to the public; or

7.3.3 any market within 7.4

7.4 A market not falling within paragraph 7.3 is eligible for the purposes

of COLL 5 if:

7.4.1 the ACD, after consultation with and notification to the

Depositary, decides that market is appropriate for

investment of, or dealing in, the Scheme Property;

7.4.2 the market is included in a list in the Prospectus; and

7.4.3 the Depositary has taken reasonable care to determine

that:

adequate custody arrangements can be provided for the

investment dealt in on that market; and

all reasonable steps have been taken by the ACD in

deciding whether that market is eligible.

7.5 In paragraph 7.4.1, a market must not be considered appropriate

unless it is regulated, operates regularly, is recognised as a market

or exchange or as a self regulatory organisation by an overseas

regulator, is open to the public, is adequately liquid and has

adequate arrangements for unimpeded transmission of income and

capital to or for the order of investors.

7.6 The eligible markets in which a Sub-fund may invest are set out in

Appendix 3.

APPENDIX 2 -

INVESTMENT MANAGEMENT AND BORROWING POWERS OF THE COMPANY

IF3/10152014/ENG/r01

42

8 Money-market instruments with a regulated

issuer

8.1 In addition to instruments admitted to or dealt in on an eligible

market, a sub-Fund may invest in an approved money-market

instrument provided it fulfils the following requirements:

8.1.1 the issue or the issuer is regulated for the purpose of

protecting investors and savings; and

8.1.2 the instrument is issued or guaranteed in accordance with

paragraph 9 below.

8.2 The issue or the issuer of a money-market instrument, other than

one dealt in on an eligible market, shall be regarded as regulated

for the purpose of protecting investors and savings if:

8.2.1 the instrument is an approved money-market instrument;

8.2.2 appropriate information is available for the instrument

(including information which allows an appropriate

assessment of the credit risks related to investment in it),

in accordance with paragraph 10 below; and

8.2.3 the instrument is freely transferable.

9 Issuers and guarantors of money-market

instruments

9.1 A Sub-fund may invest in an approved money-market instrument if

it is:

9.1.1 issued or guaranteed by any one of the following:

9.1.1.1 a central authority of an EEA State or, if the

EEA State is a federal state, one of the

members making up the federation;

9.1.1.2 a regional or local authority of an EEA

State;

9.1.1.3 the European Central Bank or a central

bank of an EEA State;

9.1.1.4 the European Union or the European

Investment Bank;

9.1.1.5 a non-EEA State or, in the case of a federal

state, one of the members making up the

federation;

9.1.1.6 a public international body to which one or

more EEA States belong; or

9.1.2 issued by a body, any securities of which are dealt in on an

eligible market; or

9.1.3 issued or guaranteed by an establishment which is:

9.1.3.1 subject to prudential supervision in

accordance with criteria defined by

Community law; or

9.1.3.2 subject to and complies with prudential

rules considered by the FCA to be at least

as stringent as those laid down by

Community law.

9.2 An establishment shall be considered to satisfy the requirement in

9.1.3.2 if it is subject to and complies with prudential rules, and

fulfils one or more of the following criteria:

9.2.1 it is located in the European Economic Area;

9.2.2 it is located in an OECD country belonging to the Group of

Ten;

9.2.3 it has at least investment grade rating;

9.2.4 on the basis of an in-depth analysis of the issuer, it can be

demonstrated that the prudential rules applicable to that

issuer are at least as stringent as those laid down by

Community law.

10 Appropriate information for money-market

instruments

10.1 In the case of an approved money-market instrument within 9.1.2

or issued by a body of the type referred to in 11 below; or which is

issued by an authority within 9.1.1.2 or a public international body

within 9.1.1.6 but is not guaranteed by a central authority within

9.1.1.1, the following information must be available:

10.1.1 information on both the issue or the issuance programme,

and the legal and financial situation of the issuer prior to

the issue of the instrument, verified by appropriately

qualified third parties not subject to instructions from the

issuer;

10.1.2 updates of that information on a regular basis and

whenever a significant event occurs; and

10.1.3 available and reliable statistics on the issue or the issuance

programme.

10.2 In the case of an approved money-market instrument issued or

guaranteed by an establishment within 9.1.3, the following

information must be available:

10.2.1 information on the issue or the issuance programme or on

the legal and financial situation of the issuer prior to the

issue of the instrument;

10.2.2 updates of that information on a regular basis and

whenever a significant event occurs; and

10.2.3 available and reliable statistics on the issue or the issuance

programme, or other data enabling an appropriate

assessment of the credit risks related to investment in

those instruments.

10.3 In the case of an approved money-market instrument:

10.3.1 within 9.1.1.1, 9.1.1.4 or 9.1.1.5; or

10.3.2 which is issued by an authority within 9.1.1.2 or a public

international body within 9.1.1.6 and is guaranteed by a

central authority within 9.1.1.1;

information must be available on the issue or the issuance

programme, or on the legal and financial situation of the

issuer prior to the issue of the instrument.

11 Spread: general

11.1 This paragraph 11 on spread does not apply to government and

public securities.

11.2 For the purposes of this requirement companies included in the

same group for the purposes of consolidated accounts as defined

in accordance with Directive 83/349/EEC or in the same group in

accordance with international accounting standards are regarded

as a single body.

11.3 Not more than 20% in value of the Scheme Property is to consist

of deposits with a single body.

11.4 Not more than 5% in value of the Scheme Property is to consist of

transferable securities or approved money-market instruments

issued by any single body.

11.5 The limit of 5% in paragraph 11.4 is raised to 10% in respect of up

to 40% in value of the Scheme Property. Covered bonds need not

be taken into account for the purpose of applying the limit of 40%..

The limit of 5% in 11.4 is raised to 25% in value of the Scheme

Property in respect of covered bonds, provided that when a Sub-

fund invests more than 5% in covered bonds issued by a single

body, the total value of covered bonds held must not exceed 80%

in value of the Scheme Property.

APPENDIX 2 -


IF3/10152014/ENG/r01

43

11.6 In applying paragraphs 11.4 and 11.5 certificates representing

certain securities are treated as equivalent to the underlying

security.

11.7 The exposure to any one counterparty in an OTC

derivative transaction must not exceed 5% in value of the Scheme Property.

This limit is raised to 10% where the counterparty is an Approved Bank.

11.8 Not more than 20% in value of a Sub-fund is to consist of

transferable securities and approved money market instruments

issued by the same group (as referred to in paragraph 11.2).

11.9 Not more than 10% in value of a Sub-fund is to consist of the units

of any one collective investment scheme.

11.10 In applying the limits in paragraphs 11.3, 11.4, 11.5, 11.6 and 11.7

not more than 20% in value of the Scheme Property is to consist of

any combination of two or more of the following:

11.10.1 transferable securities (including covered bonds) or

approved money market instruments issued by; or

11.10.2 deposits made with; or

11.10.3 exposures from OTC derivatives transactions made with;

a single body.

11.11 For the purpose of calculating the limits in 11.7 and 11.10, the

exposure in respect of an OTC derivative may be reduced to the

extent that collateral is held in respect of it if the collateral meets

each of the conditions specified in 11.12.

11.12 The conditions referred to in 11.11 are that the collateral:

11.12.1 is marked-to-market on a daily basis and exceeds the

value of the amount at risk;

11.12.2 is exposed only to negligible risks (e.g. government bonds

of first credit rating or cash) and is liquid;

11.12.3 is held by a third party custodian not related to the provider

or is legally secured from the consequences of a failure of

a related party; and

11.12.4 can be fully enforced by a Sub-fund at any time.

11.13 For the purpose of calculating the limits in 11.7 and 11.10, OTC

derivative positions with the same counterparty may be netted

provided that the netting procedures:

11.13.1 comply with the conditions set out in Section 3 (Contractual

netting (Contracts for novation and other netting

agreements)) of Annex III to Directive 2000/12/EC; and

11.13.2 are based on legally binding agreements.

11.14 In applying this rule, all derivatives transactions are deemed to be

free of counterparty risk if they are performed on an exchange

where the clearing house meets each of the following conditions:

11.14.1 it is backed by an appropriate performance guarantee; and

11.14.2 it is characterised by a daily mark-to-market valuation of

the derivative positions and an at least daily margining.

12 Spread: Government and public securities

12.1 The above restrictions do not apply to government and public

securities (“such securities”). The restrictions in relation to such

securities are set out below.

12.2 Where no more than 35% in value of the Scheme Property is

invested in such securities issued by any one body, there is no limit

on the amount which may be invested in such securities or in any

one issue.

12.3 Subject to its investment objective and policy, a Sub-fund may invest

more than 35% in value of the Scheme Property in such securities

issued by any one body provided that:

12.3.1 the ACD has before any such investment is made

consulted with the Depositary and as a result considers

that the issuer of such securities is one which is

appropriate in accordance with the investment objectives of

a Sub-fund;

12.3.2 no more than 30% in value of the Scheme Property

consists of such securities of any one issue;

12.3.3 the Scheme Property includes such securities issued by

that or another issuer, of at least six different issues.

12.4 In relation to such securities:

12.4.1 issue, issued and issuer include guarantee, guaranteed

and guarantor; and

12.4.2 an issue differs from another if there is a difference as to

repayment date, rate of interest, guarantor or other

material terms of the issue.

12.5 Notwithstanding paragraph 11.1 above, and subject to paragraphs

12.2 and 12.3, in applying the 20% limit in 11.11 with respect to a

single body, government and public securities issued by that body

shall be taken into account.

12.6 In relation to M&G Corporate Bond Fund, M&G Emerging Markets

Bond Fund, M&G European High Yield Bond Fund, M&G Global

Government Bond Fund over 35% of the Scheme Property may be

invested in Government and other public securities issued by any

of:

12.6.1 the Government of the United Kingdom (including the

Scottish Administration, the Executive Committee of the

Northern Ireland Assembly and the National Assembly of

Wales);

12.6.2 the Governments of Austria, Belgium, Bulgaria, Cyprus,

Czech Republic, Denmark, Estonia, Finland, France,

Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia,

Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands,

Norway, Poland, Portugal, Romania, Slovakia, Slovenia,

Spain, Sweden, Brazil, China, Malaysia, Mexico, South

Africa, and Turkey;

12.6.3 the Government of Australia, Canada, Japan, New

Zealand, Switzerland, USA;

12.6.4 the African Development Bank, Asian Development Bank,

Eurofima, European Economic Community, European

Bank for Reconstruction and Development, European

Investment Bank, International Bank for Reconstruction

and Development, International Financial Corporation.

13 Investment in collective investment schemes

13.1 A Sub-fund may invest in units in a collective investment scheme

provided that the second scheme complies with the following

requirements:

13.1.1 it is a scheme which complies with the conditions

necessary for it to enjoy the rights conferred by the UCITS

Directive; or

13.1.2 is recognised under the provisions of section 270 of the

Act (Schemes authorised in designated countries or

territories); or

13.1.3 is authorised as a non-UCITS retail scheme (provided the

requirements of article 19(1)(e) of the UCITS Directive are

met); or

13.1.4 is authorised in another EEA State (provided the

requirements of article 19(1)(e) of the UCITS Directive are

met);

13.1.5 it is a scheme which complies where relevant with

paragraph 13.4 below; and

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13.1.6 it is a scheme which has terms which prohibit more than

10% in value of the Scheme Property consisting of units in

collective investment schemes.

13.1.7 where it is an umbrella scheme, the provisions in

paragraphs 13.1.5 and 13.1.6 apply to a Sub-fund as if it

were a separate scheme.

13.2 Not more than 10% of the Scheme Property of a Sub-fund is to

consist of units in collective investment schemes.

13.3 For the purposes of paragraphs 13.1 and 13.2 a Sub-fund of an

umbrella scheme is to be treated as if it were a separate scheme.

A Sub-fund may invest in or dispose of shares in another Sub-fund

of the Company (the second Sub-fund) provided that the second

Sub-fund does not hold shares in any other Sub-fund in the

Company.

13.4 In accordance with COLL 5.2.15R a Sub-fund may invest up to 10%

of its Scheme property units in collective investment schemes

managed or operated by (or, if it is an open-ended investment

company has as its authorised corporate director), the ACD or an

Associate of the ACD.

13.5 A Sub-fund must not invest in or dispose of units in another

collective investment scheme (the second scheme), which is

managed or operated by (or in the case of an open-ended

investment company has as its authorised corporate director), the

ACD, or an Associate of the ACD, unless:

13.5.1 there is no charge in respect of the investment in or the

disposal of units in the second scheme; or

13.5.2 the ACD is under a duty to pay to a Sub-fund by the close

of business on the fourth business day next after the

agreement to buy or to sell the amount referred to in

paragraphs 13.5.3 and 13.5.4;

13.5.3 on investment, either:

any amount by which the consideration paid by a Sub-fund

for the units in the second scheme exceeds the price that

would have been paid for the benefit of the second scheme

had the units been newly issued or sold by it; or

if such price cannot be ascertained by the ACD, the

maximum amount of any charge permitted to be made by

the seller of units in the second scheme;

13.5.4 on disposal, the amount of any charge made for the

account of the ACD or operator of the second scheme or

an Associate of any of them in respect of the disposal; and

13.6 In paragraphs 13.5.1 to 13.5.4 above:

13.6.1 any addition to or deduction from the consideration paid on

the acquisition or disposal of units in the second scheme,

which is applied for the benefit of the second scheme and

is, or is like, a dilution levy or SDRT provision, is to be

treated as part of the price of the units and not as part of

any charge; and

13.6.2 any switching charge made in respect of an exchange of

units in one Sub-fund or separate part of the second

scheme for units in another Sub-fund or separate part of

that scheme is to be included as part of the consideration

paid for the units.

14 Investment in nil and partly paid securities

14.1 A transferable security or an approved money market instrument on

which any sum is unpaid falls within a power of investment only if it

is reasonably foreseeable that the amount of any existing and

potential call for any sum unpaid could be paid by the Company, at

the time when payment is required, without contravening the rules

in COLL 5.

15 Derivatives – General

15.1 All sub-funds may, in accordance with the COLL Sourcebook, use

derivatives for the purposes of Efficient Portfolio Management

(including hedging). In addition, the M&G Corporate Bond Fund,

M&G Emerging Markets Bond Fund, M&G European Corporate

Bond Fund, M&G European High Yield Bond Fund and M&G

Global Government Bond Fund may use derivatives for investment

purposes.

15.2 Under the COLL Sourcebook derivatives are permitted for Sub-

funds for investment purposes and derivative transactions may be

used for the purposes of hedging or meeting the investment

objectives or both.

15.3 A transaction in derivatives or a forward transaction must not be

effected for a Sub-fund unless the transaction is of a kind specified

in paragraph 16 below (Permitted transactions (derivatives and

forwards)); and the transaction is covered, as required by paragraph

28 (Cover for transactions in derivatives and forward transactions).

15.4 Where a Sub-fund invests in derivatives, the exposure to the

underlying assets must not exceed the limits set out in COLL in

relation to spread (COLL 5.2.13 R Spread : general and COLL

5.2.14 R Spread : government and public securities) except for

index based derivatives where the rules below apply.

15.5 Where a transferable security or approved money market

instrument embeds a derivative, this must be taken into account for

the purposes of complying with this section.

15.6 A transferable security or an approved money-market instrument

will embed a derivative if it contains a component which fulfils the

following criteria:

15.6.1 by virtue of that component some or all of the cash flows

that otherwise would be required by the transferable

security or approved money-market instrument which

functions as host contract can be modified according to a

specified interest rate, financial instrument price, foreign

exchange rate, index of prices or rates, credit rating or

credit index or other variable, and therefore vary in a way

similar to a stand-alone derivative;

15.6.2 its economic characteristics and risks are not closely

related to the economic characteristics and risks of the

host contract; and

15.6.3 it has a significant impact on the risk profile and pricing of

the transferable security or approved money-market

instrument.

15.6.4 A transferable security or an approved money-market

instrument does not embed a derivative where it contains

a component which is contractually transferable

independently of the transferable security or the approved

money-market instrument. That component shall be

deemed to be a separate instrument.

15.7 Where a scheme invests in an index based derivative, provided the

relevant index falls within paragraph 17 (Financial indices

underlying derivatives) the underlying constituents of the index do

not have to be taken into account for the purposes of the rules on

spread in COLL. The relaxation is subject to the ACD continuing to

ensure that the Scheme Property provides a prudent spread of risk.

Please refer to Section 41 above for a description of the risk factors

associated with investments in derivatives.

16 Permitted transactions (derivatives and

forwards)

16.1 A transaction in a derivative must be in an approved derivative; or

be one which complies with paragraph 20 (OTC transactions in

derivatives).

16.2 A transaction in a derivative must have the underlying consisting of

any or all of the following to which the scheme is dedicated:

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16.2.1 transferable securities permitted under paragraph 6

(Transferable securities and approved money market

instruments generally to be admitted or dealt in on an

Eligible Market);

16.2.2 approved money market instruments permitted under

paragraph 5 (approved money market instruments) above;

16.2.3 deposits permitted under paragraph 23 (investment in

deposits) below;

16.2.4 derivatives permitted under this rule;

16.2.5 collective investment scheme units permitted under

paragraph 13 (investment collective investment schemes)

above;

16.2.6 financial indices which satisfy the criteria set out at

paragraph 17 (financial indices underlying derivatives)

below;

16.2.7 interest rates;

16.2.8 foreign exchange rates; and

16.2.9 currencies.

16.3 A transaction in an approved derivative must be effected on or

under the rules of an eligible derivatives market.

16.4 A transaction in a derivative must not cause a Sub-fund to diverge

from its investment objectives as stated in the Instrument

constituting the scheme and the most recently published version of

this Prospectus.

16.5 A transaction in a derivative must not be entered into if the intended

effect is to create the potential for an uncovered sale of one or

more, transferable securities approved, money market instruments,

units in collective investment schemes, or derivatives provided that

a sale is not to be considered as uncovered if the conditions in

paragraph 19 (Requirement to cover sales) are satisfied.

16.6 Any forward transaction must be with an Eligible Institution or an

Approved Bank.

16.7 A derivative includes an instrument which fulfils the following

criteria:

16.7.1 it allows the transfer of the credit risk of the underlying

independently from the other risks associated with that

underlying;

16.7.2 it does not result in the delivery or the transfer of assets

other than those referred to in paragraph 1.2 above

(UCITS schemes: permitted types of scheme property)

including cash;

16.7.3 in the case of an OTC derivative, it complies with the

requirements in paragraph 20 below (OTC transactions in

derivatives);

16.7.4 its risks are adequately captured by the risk management

process of the ACD, and by its internal control

mechanisms in the case of risks of asymmetry of

information between the ACD and the counterparty to the

derivative, resulting from potential access of the

counterparty to non-public information on persons whose

assets are used as the underlying by that derivative.

16.8 A Sub-fund may not undertake transactions in derivatives on

commodities.

17 Financial indices underlying derivatives

17.1 The financial indices referred to in 16.2.6 are those which satisfy

the following criteria:

17.1.1 the index is sufficiently diversified;

17.1.2 the index represents an adequate benchmark for the

market to which it refers; and

17.1.3 the index is published in an appropriate manner.

17.2 A financial index is sufficiently diversified if:

17.2.1 it is composed in such a way that price movements or

trading activities regarding one component do not unduly

influence the performance of the whole index;

17.2.2 where it is composed of assets in which a Sub-fund is

permitted to invest, its composition is at least diversified in

accordance with the requirements with respect to spread

and concentration set out in this section; and

17.2.3 where it is composed of assets in which a Sub-fund cannot

invest, it is diversified in a way which is equivalent to the

diversification achieved by the requirements with respect to

spread and concentration set out in this section.

17.3 A financial index represents an adequate benchmark for the market

to which it refers if:

17.3.1 it measures the performance of a representative group of

underlyings in a relevant and appropriate way;

17.3.2 it is revised or rebalanced periodically to ensure that it

continues to reflect the markets to which it refers, following

criteria which are publicly available; and

17.3.3 the underlyings are sufficiently liquid, allowing users to

replicate it if necessary.

17.4 A financial index is published in an appropriate manner if:

17.4.1 its publication process relies on sound procedures to

collect prices, and calculate and subsequently publish the

index value, including pricing procedures for components

where a market price is not available; and

17.4.2 material information on matters such as index calculation,

rebalancing methodologies, index changes or any

operational difficulties in providing timely or accurate

information is provided on a wide and timely basis.

17.5 Where the composition of underlyings of a transaction in a

derivative does not satisfy the requirements for a financial index, the

underlyings for that transaction shall where they satisfy the

requirements with respect to other underlyings pursuant to 16.2, be

regarded as a combination of those underlyings.

18 Transactions for the purchase of property

18.1 A derivative or forward transaction which will or could lead to the

delivery of property for the account of a Sub-fund may be entered

into only if that property can be held for the account of the Sub-

fund, and the ACD having taken reasonable care determines that

delivery of the property under the transaction will not occur or will

not lead to a breach of the rules in the COLL Sourcebook.

19 Requirement to cover sales

19.1 No agreement by or on behalf of a Sub-fund to dispose of property

or rights may be made unless the obligation to make the disposal

and any other similar obligation could immediately be honoured by

the Sub-fund by delivery of property or the assignment (or, in

Scotland, assignation) of rights, and the property and rights above

are owned by the Sub-fund at the time of the agreement. This

requirement does not apply to a deposit.

19.2 Paragraph 19.1 does not apply where:

19.2.1 the risks of the underlying financial instrument of a

derivative can be appropriately represented by another

financial instrument and the underlying financial instrument

is highly liquid; or

19.2.2 the ACD or the Depositary has the right to settle the

derivative in cash and cover exists within the Scheme

Property which falls within one of the following asset

Classes:

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cash;

liquid debt instruments (e.g. government bonds of first

credit rating) with appropriate safeguards (in particular,

haircuts); or

other highly liquid assets having regard to their correlation

with the underlying of the financial derivative instruments,

subject to appropriate safeguards (e.g. haircuts where

relevant).

19.3 In the asset classes referred to in 19.2.2, an asset may be

considered as liquid where the instrument can be converted into

cash in no more than seven business days at a price closely

corresponding to the current valuation of the financial instrument

on its own market.

20 OTC transactions in derivatives

20.1 Any transaction in an OTC derivative under paragraph 16.1 must

be:

20.1.1 in a future, option or contract for differences;

20.1.2 with an approved counterparty; a counterparty to a

transaction in derivatives is approved only if the

counterparty is an Eligible Institution or an Approved Bank;

or a person whose permission (including any requirements

or limitations), as published in the FCA Register or whose

Home State authorisation, permits it to enter into the

transaction as principal off-exchange;

20.1.3 on approved terms; the terms of the transaction in

derivatives are approved only if, before the transaction is

entered into, the Depositary is satisfied that the

counterparty has agreed with aSub-fund: to provide at

least daily and at any other time at the request of the Sub-

fund reliable and verifiable valuation in respect of that

transaction corresponding to its fair value (being the

amount for which an asset could be exchanged, or a

liability settled, between knowledgeable, willing parties in

an arm’s length transaction) and which does not rely only

on market quotations by the counterparty and that it will, at

the request of the Sub-fund , enter into a further

transaction to sell, liquidate or close out that transaction at

any time, at a fair value arrived at under the reliable market

value basis or pricing model agreed under 20.1.4; and

20.1.4 capable of reliable valuation; a transaction in derivatives is

capable of reliable valuation only if the ACD having taken

reasonable care determines that, throughout the life of the

derivative (if the transaction is entered into), it will be able

to value the investment concerned with reasonable

accuracy: on the basis of an up-to-date market value which

the ACD and the Depositary have agreed is reliable; or if

that value is not available, on the basis of a pricing model

which the ACD and the Depositary have agreed uses an

adequate recognised methodology; and

20.1.5 subject to verifiable valuation; a transaction in derivatives is

subject to verifiable valuation only if, throughout the life of

the derivative (if the transaction is entered into) verification

of the valuation is carried out by:

20.1.5.1 an appropriate third party which is

independent from the counterparty of the

derivative, at an adequate frequency and in

such a way that the ACD is able to check it;

or

20.1.5.2 a department within the ACD which is

independent from the department in charge

of managing the scheme property and

which is adequately equipped for such a

purpose.

21 Valuation of OTC derivatives

21.1 For the purposes of paragraph 20.1.2, the ACD must:

21.1.1 establish, implement and maintain arrangements and

procedures which ensure appropriate, transparent and fair

valuation of the exposures of a Fund to OTC derivatives;

and

21.1.2 ensure that the fair value of OTC derivatives is subject to

adequate, accurate and independent assessment.

21.2 Where the arrangements and procedures referred to in paragraph

21.1.1 involve the performance of certain activities by third parties,

the ACD must comply with the requirements in SYSC 8.1.13 R

(Additional requirements for a management company) and COLL

6.6A.4 R (4) to (6) (Due diligence requirements of AFMs of UCITS

schemes).

21.3 The arrangements and procedures referred to in this rule must be:

21.3.1 adequate and proportionate to the nature and complexity

of the OTC derivative concerned; and

21.3.2 adequately documented

22 Risk management

22.1 The ACD must use a risk management process, as reviewed by the

Depositary, enabling it to monitor and measure as frequently as

appropriate the risk of a Sub-fund’s positions and their contribution

to the overall risk profile of the Sub-fund.

22.2 The following details of the risk management process must be

regularly notified by the ACD to the FCA and at least on an annual

basis:

22.2.1 a true and fair view of the types of derivatives and forward

transactions to be used within a Company together with

their underlying risks and any relevant quantitative limits;

and

22.2.2 the methods for estimating risks in derivative and forward

transactions.

23 Investment in deposits

Only M&G Corporate Bond Fund, M&G Emerging Markets Bond

Fund, M&G European Corporate Bond Fund, M&G European High

Yield Bond Fund and M&G Global Government Bond Fund may

invest in deposits.

23.1 A Sub-fund may invest in deposits only with an Approved Bank and

which are repayable on demand or have the right to be withdrawn,

and maturing in no more than 12 months.

24 Significant influence

24.1 The Company must not acquire transferable securities issued by a

body corporate and carrying rights to vote (whether or not on

substantially all matters) at a general meeting of that body

corporate if:

24.1.1 immediately before the acquisition, the aggregate of any

such securities held by a Sub-fund gives the Sub-fund

power significantly to influence the conduct of business of

that body corporate; or

24.1.2 the acquisition gives the Company that power.

24.2 The Company is to be taken to have power significantly to influence

the conduct of business of a body corporate if it can, because of

the transferable securities held by it, exercise or control the exercise

of 20% or more of the voting rights in that body corporate

(disregarding for this purpose any temporary suspension of voting

rights in respect of the transferable securities of that body

corporate).

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25 Concentration

The Company:

25.1 must not acquire transferable securities (other than debt securities)

which:

25.1.1 do not carry a right to vote on any matter at a general

meeting of the body corporate that issued them; and

25.1.2 represent more than 10% of those securities issued by that

body corporate;

25.2 must not acquire more than 10% of the debt securities issued by

any single body;

25.3 must not acquire more than 25% of the units in a collective

investment scheme;

25.4 must not acquire more than 10% of the approved money market

instruments issued by any single body; and

25.5 need not comply with the limits in paragraphs 25.2 to 25.4 if, at the

time of acquisition, the net amount in issue of the relevant

investment cannot be calculated.

26 Schemes replicating an index

26.1 Notwithstanding paragraph 11 a Sub-fund may invest up to 20% in

value of the Scheme Property in shares and debentures which are

issued by the same body where the stated investment policy is to

replicate the composition of a relevant index as defined below.

26.2 Replication of the composition of a relevant index shall be

understood to be a reference to replication of the composition of

the underlying assets of that index, including the use of techniques

and instruments permitted for the purpose of efficient portfolio

management.

26.3 The 20% limit can be raised up to 35% in value of the Scheme

Property, but only in respect of one body and where justified by

exceptional market conditions.

26.4 The indices referred to above are those which satisfy the following

criteria:

26.4.1 The composition is sufficiently diversified;

26.4.2 The index represents an adequate benchmark for the

market to which it refers; and

26.4.3 The index is published in an appropriate manner.

26.5 The composition of an index is sufficiently diversified if its

components adhere to the spread and concentration requirements

in this section.

26.6 An index represents an adequate benchmark if its provider uses a

recognised methodology which generally does not result in the

exclusion of a major issuer of the market to which it refers.

26.7 An index is published in an appropriate manner if:

26.7.1 it is accessible to the public;

26.7.2 the index provider is independent from the index-replicating

Sub-fund; this does not preclude index providers and the

Sub-fund from forming part of the same group, provided

that effective arrangements for the management of

conflicts of interest are in place.

27 Derivatives exposure

27.1 A Sub-fund may invest in derivatives and forward transactions as

long as the exposure to which the Sub-fund is committed by that

transaction itself is suitably covered from within its Scheme

Property. Exposure will include any initial outlay in respect of that

transaction.

27.2 Cover ensures that a Sub-fund is not exposed to the risk of loss of

property, including money, to an extent greater than the net value of

the Scheme Property. Therefore, the Sub-fund must hold Scheme

Property sufficient in value or amount to match the exposure arising

from a derivative obligation to which the Sub-fund is committed.

Paragraph 28 (Cover for transactions in derivatives and forward

transactions) sets out detailed requirements for cover of a sub-fund.

27.3 Cover used in respect of one transaction in derivatives or forward

transaction must not be used for cover in respect of another

transaction in derivatives or a forward transaction.

28 Cover for transactions in derivatives and forward

transactions

28.1 A transaction in derivatives or forward transaction is to be entered

into only if the maximum exposure, in terms of the principal or

notional principal created by the transaction to which the scheme is

or may be committed by another person is covered globally.

28.2 Exposure is covered globally if adequate cover from within the

Scheme Property is available to meet the scheme’s total exposure,

taking into account the value of the underlying assets, any

reasonably foreseeable market movement, counterparty risk, and

the time available to liquidate any positions.

28.3 Cash not yet received into the Scheme Property but due to be

received within one month is available as cover.

28.4 Property the subject of a stock lending transaction is only available

for cover if the ACD has taken reasonable care to determine that it

is obtainable (by return or re-acquisition) in time to meet the

obligation for which cover is required.

28.5 The total exposure relating to derivatives held in a Sub-fund may

not exceed the net value of the Scheme Property.

29 Daily calculation of global exposure

29.1 The ACD must calculate the global exposure of the Company on at

least a daily basis.

29.2 For the purposes of this section, exposure must be calculated

taking into account the current value of the underlying assets, the

counterparty risk, future market movements and the time available

to liquidate the positions.

30 Calculation of global exposure

30.1 The ACD must calculate the global exposure of the Company it

manages either as:

30.1.1 the incremental exposure and leverage generated through

the use of derivatives and forward transactions (including

embedded derivatives as referred to in paragraph 15

(Derivatives: general), which may not exceed 100% of the

Net Asset Value of the scheme property of the Company,

by way of the commitment approach; or

30.1.2 the market risk of the scheme property of the Company, by

way of the value at risk approach.

30.2 The ACD must ensure that the method selected above is

appropriate, taking into account:

30.2.1 the investment strategy pursued by the Company;

30.2.2 the types and complexities of the derivatives and forward

transactions used; and

30.2.3 the proportion of the scheme property comprising

derivatives and forward transactions.

30.3 Where a Company employs techniques and instruments including

repo contracts or stock lending transactions in accordance with

paragraph 33 (Stock lending) in order to generate additional

leverage or exposure to market risk, the ACD must take those

transactions into consideration when calculating global exposure.

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30.4 For the purposes of paragraph 30.1, value at risk means a measure

of the maximum expected loss at a given confidence level over the

specific time period.

30.5 The ACD calculates the global exposure of M&G International

Sovereign IF(3) using the value at risk (VaR) based techniques.

VaR measure each fund’s sensitivity to core market risk factors

such as credit risk and interest rates. VaR is a technique used to

estimate the probability of portfolio losses based on statistical

analysis of historical price trends and volatilities.

31 Commitment approach

31.1 Where the ACD uses the commitment approach for the calculation

of global exposure, it must:

31.1.1 ensure that it applies this approach to all derivative and

forward transactions (including embedded derivatives as

referred to in paragraph 15 (Derivatives: general)), whether

used as part of the Company’s general investment policy,

for the purposes of risk reduction or for the purposes of

Efficient Portfolio Management in accordance with

paragraph 33 (Stock lending); and

31.1.2 convert each derivative or forward transaction into the

market value of an equivalent position in the underlying

asset of that derivative or forward (standard commitment

approach).

31.2 The ACD may apply other calculation methods which are

equivalent to the standard commitment approach.

31.3 For the commitment approach, the ACD may take account of

netting and hedging arrangements when calculating global

exposure of the Company, where these arrangements do not

disregard obvious and material risks and result in a clear reduction

in risk exposure.

31.4 Where the use of derivatives or forward transactions does not

generate incremental exposure for the Company, the underlying

exposure need not be included in the commitment calculation.

31.5 Where the commitment approach is used, temporary borrowing

arrangements entered into on behalf of the Company in

accordance with paragraph 34 need not form part of the global

exposure calculation.

32 Cover and borrowing

328.1 Cash obtained from borrowing, and borrowing which the ACD

reasonably regards an Eligible Institution or an Approved Bank to

be committed to provide, is available for cover under the previous

paragraph 28 (Cover for transactions in derivatives and forward

transactions) as long as the normal limits on borrowing (see below)

are observed.

32.2 Where, for the purposes of this paragraph a Sub-fund borrows an

amount of currency from an Eligible Institution or an Approved

Bank; and keeps an amount in another currency, at least equal to

such borrowing for the time on deposit with the lender (or his agent

or nominee), then this applies as if the borrowed currency, and not

the deposited currency, were part of the Scheme Property, and the

normal limits on borrowing under paragraph 34 (General power to

borrow) do not apply to that borrowing.

33 Cash and near cash

33.1 Cash and near cash must not be retained in the Scheme Property

except to the extent that, this may reasonably be regarded as

necessary in order to enable:

33.1.1 the pursuit of a Sub-fund’s investment objectives

(applicable to M&G Corporate Bond Fund, M&G Emerging

Markets Bond Fund, M&G European Corporate Bond

Fund, M&G European High Yield Bond Fund and M&G

Global Government Bond Fund only);or

33.1.2 redemption of Shares; or

33.1.3 efficient management of a Sub-fund in accordance with its

investment objectives; or

33.1.4 other purposes which may reasonably be regarded as

ancillary to the investment objectives of a Sub-fund.

33.2 During the period of the initial offer the Scheme Property may

consist of cash and near cash without limitation.

34 General power to borrow

34.1 A Sub-fund may, in accordance with this paragraph and paragraph

35, borrow money for the use of the Sub-fund on terms that the

borrowing is to be repayable out of the Scheme Property. This

power to borrow is subject to the obligation of the Sub-fund to

comply with any restriction in the instrument constituting the Sub-

fund.

34.2 A Sub-fund may borrow under paragraph 34.1 only from an Eligible

Institution or an Approved Bank.

34.3 The ACD must ensure that any borrowing is on a temporary basis

and that borrowings are not persistent, and for this purpose the

ACD must have regard in particular to:

34.3.1 the duration of any period of borrowing; and

34.3.2 the number of occasions on which resort is had to

borrowing in any period.

34.4 The ACD must ensure that no period of borrowing exceeds three

months, without the consent of the Depositary.

34.5 These borrowing restrictions do not apply to “back to back”

borrowing for currency hedging purposes.

34.6 A Sub-fund must not issue any debenture unless it acknowledges

or creates a borrowing that complies with paragraph 34.1 to 34.5.

35 Borrowing limits

35.1 The ACD must ensure that a Sub-fund’s borrowing does not, on

any business day, exceed 10% of the value of the Scheme

Property of the Sub-fund.

35.2 In this paragraph 35, “borrowing” includes, as well as borrowing in

a conventional manner, any other arrangement (including a

combination of derivatives) designed to achieve a temporary

injection of money into the Scheme Property in the expectation that

the sum will be repaid.

35.3 For each Sub-fund, borrowing does not include any arrangement

for the Sub-fund to pay to a third party (including the ACD) any set

up costs which the Sub-fund is entitled to amortise and which were

paid on behalf of the Sub-fund by the third party.

36 Restrictions on lending of money

36.1 None of the money in the Scheme Property of a Sub-fund may be

lent and, for the purposes of this prohibition, money is lent by a Sub-

fund if it is paid to a person (“the payee”) on the basis that it should

be repaid, whether or not by the payee.

36.2 Acquiring a debenture is not lending for the purposes of paragraph

36.1; nor is the placing of money on deposit or in a current account.

36.3 Paragraph 36.1 does not prevent a Sub-fund from providing an

officer of the Sub-fund with funds to meet expenditure to be

incurred by him for the purposes of the Sub-fund (or for the

purposes of enabling him properly to perform his duties as an

officer of the Sub-fund) or from doing anything to enable an officer

to avoid incurring such expenditure.

37 Restrictions on lending of property other than

money

37.1 The Scheme Property of a Sub-fund other than money must not be

lent by way of deposit or otherwise.

APPENDIX 2 -


IF3/10152014/ENG/r01

49

37.2 The Scheme Property of a Sub-fund must not be mortgaged.

38 General power to accept or underwrite issues of

stock

38.1 Any power in Chapter 5 of the COLL Sourcebook to invest in

transferable securities may be used for the purpose of entering into

transactions to which this section applies, subject to compliance

with any restriction in the Instrument of Incorporation.

38.2 This section applies, subject to paragraph 38.3, to any agreement

or understanding:

38.2.1 which is an underwriting or Sub-underwriting agreement;

or

38.2.2 which contemplates that securities will or may be issued or

subscribed for or acquired for the account of a ub-fund.

34.3 Paragraph 34.2 does not apply to:

38.3.1 an option; or

38.3.2 a purchase of a transferable security which confers a right:

to subscribe for or acquire a transferable security; or

to convert one transferable security into another.

38.3.3 The exposure of a Sub-fund to agreements and

understandings within paragraph 38.2 must, on any

business day:

be covered in accordance with the requirements of rule

5.3.3R of the COLL Sourcebook; and

be such that, if all possible obligations arising under them

had immediately to be met in full, there would be no breach

of any limit in Chapter 5 of the COLL Sourcebook.

39 Guarantees and indemnities

39.1 A Sub-fund or the Depositary for the account of the Sub-fund must

not provide any guarantee or indemnity in respect of the obligation

of any person.

39.2 None of the Scheme Property of a Sub-fund may be used to

discharge any obligation arising under a guarantee or indemnity

with respect to the obligation of any person.

39.3 Paragraphs 39.1 and 39.2 do not apply in respect of a Sub-fund to:

39.3.1 any indemnity or guarantee given for margin requirements

where the derivatives or forward transactions are being

used in accordance with the FCA rules;

39.3.2 an indemnity falling within the provisions of regulation

62(3) (Exemptions from liability to be void) of the Treasury

Regulations;

39.3.3 an indemnity (other than any provision in it which is void

under regulation 62 of the Treasury Regulations) given to

the Depositary against any liability incurred by it as a

consequence of the safekeeping of any of the Scheme

Property by it or by anyone retained by it to assist it to

perform its function of the safekeeping of the Scheme

Property; and

39.3.4 an indemnity given to a person winding up a scheme if the

indemnity is given for the purposes of arrangements by

which the whole or part of the property of that scheme

becomes the first property of a Sub-fund and the holders

of units in that scheme become the first Shareholders in

the Sub-fund.

40 Efficient Portfolio Management

40.1 The Company may enter into transactions for the purposes of

efficient portfolio management (‘EPM’), including hedging

transactions and temporary short term tactical asset allocation, e.g.

for the purposes of preserving the value of an asset or assets of

the Company and liquidity management purposes,(i.e. to enable

the Company to be adequately invested).

Such transactions may include, but are not limited to currency

forwards, futures, credit default swaps, total return swaps, dividend

swaps, asset swaps, options and contracts for differences.

A number of risks arise in relation to derivatives transactions:

40.2 Permitted EPM transactions (excluding stock lending

arrangements) are transactions in derivatives (i.e. options, futures

or contracts for differences) dealt in or traded on an approved

derivatives market; off exchange futures, options or contracts for

differences resembling options; or synthetic futures in certain

circumstances. The Company may enter into approved derivatives

transactions on derivatives markets which are eligible. Eligible

derivatives markets are those which the ACD after consultation with

the Depositary has decided are appropriate for the purpose of

investment of or dealing in the scheme property with regard to the

relevant criteria set out in the Regulations and the Guidance on

eligible markets issued by the FCA as amended from time to time.

40.3 The eligible derivatives markets for the Company are set out in

Appendix 3.

40.4 New eligible derivatives markets may be added to a Sub-fund in

accordance with the Regulations and only after the ACD has

revised the prospectus accordingly.

40.5 Any forward transactions must be with an approved counterparty

(eligible institutions, money market institutions etc). A derivatives or

forward transaction which would or could lead to delivery of scheme

property to the Depositary in respect of the Company may be

entered into only if such scheme property can be held by the

Company, and the ACD reasonably believes that delivery of the

property pursuant to the transactions will not lead to a breach of the

Regulations.

40.6 There is no limit on the amount of the scheme property which may

be used for EPM but the transactions must satisfy three broadly-

based requirements:

40.6.1 A transaction must reasonably be believed by the ACD to

be economically appropriate to the efficient portfolio

management of the Company. This means that

transactions undertaken to reduce risk or cost (or both)

must alone or in combination with other EPM transactions

diminish a risk or cost of a kind or level which it is sensible

to reduce and transactions undertaken to generate

additional capital or income must confer a benefit on the

Company or the Sub-fund.

40.6.2 EPM may not include speculative transactions.

40.6.3 The purpose of an EPM transaction for the Company must

be to achieve one of the following aims in respect of the

Company or a Sub-fund:

• reduction of risk

• reduction of cost

• the generation of additional capital or income

40.6.3.1 Reduction of risk allows for the use of the

technique of cross-currency hedging in

order to switch all or part of the Company’s

or Sub-fund’s exposure away from a

currency the ACD considers unduly prone

to risk, to another currency. This aim also

permits the use of stock index contracts to

change the exposure from one market to

another, a technique known as ‘tactical

asset allocation’.

40.6.3.2 Reduction of cost allows for the use of

futures or options contracts, either on

specific stocks or on an index, in order to

APPENDIX 2 -


IF3/10152014/ENG/r01

50

minimise or eliminate the effect of changing

prices of stocks to be bought or sold.

40.6.3.3 The aims of reduction of risk or cost,

together or separately, allow the ACD on a

temporary basis to use the technique of

tactical asset allocation. Tactical asset

allocation permits the ACD to undertake a

switch in exposure by use of derivatives,

rather than through sale and purchase of

the scheme property. If an EPM transaction

for the Company relates to the acquisition

or potential acquisition of transferable

securities, the ACD must intend that the

Company should invest in transferable

securities within a reasonable time and the

ACD shall thereafter ensure that, unless the

position has itself been closed out, that

intention is realised within that reasonable

time.

40.6.3.4 The generation of additional capital or

income for the Company or Sub-fund with

no or an acceptably low level of risk means

the ACD reasonably believes that the

Company or Sub-fund is certain (or certain

barring events which are not reasonably

foreseeable) to derive a benefit.

The generation of additional capital or

income may arise out of taking advantage

of price imperfections or from the receipt of

a premium for writing of covered call or

covered put options (even if the benefit is

obtained at the expense of the foregoing of

yet greater benefit) or pursuant to

stocklending as permitted by the

Regulations. The relevant purpose must

relate to scheme property; scheme

property (whether precisely identified or

not) which is to be or is proposed to be

acquired for the Company; and anticipated

cash receipts of the Company, if due to be

received at some time and likely to be

received within one month.

40.7 Each EPM transaction must be fully covered ‘individually’ by

scheme property of the right kind (i.e. in the case of exposure in

terms of property, appropriate transferable securities or other

property; and, in the case of exposure in terms of money, cash,

near-cash instruments, borrowed cash or transferable securities

which can be sold to realise the appropriate cash). It must also be

covered ‘globally’ (i.e. after providing cover for existing EPM

transactions there is adequate cover for another EPM transaction

within the scheme property - there can be no gearing). Scheme

property and cash can be used only once for cover and, generally,

scheme property is not available for cover if it is the subject of a

stocklending transaction. The EPM lending transaction in a back to

back currency borrowing (i.e. borrowing permitted in order to

reduce or eliminate risk arising by reason of fluctuations in

exchange rates) does not require cover.

APPENDIX 2 -


IF3/10152014/ENG/r01

51

Where permitted by their objective and policy, a Sub-fund may deal in any

securities, derivatives or money market instruments on any market that is:

a) a regulated market; or

b) a market in an EEA State which is regulated, operates regularly and is

open to the public; or

c) a market which the ACD, after consultation with the Depositary, decides is

appropriate for investment of or dealing in the scheme property (see

Appendix 2, 7.4 for more detail).

For the purposes of “b” above, the Manager may trade in bonds and other

securities issued by non-UK institutions, on the UK OTC Market. Additionally,

for “c” above, the markets listed below have been deemed appropriate.

In addition, up to 10% in value of a Sub-fund may be invested in transferable

securities and/or derivatives which are not listed on these markets.

[In the event that an eligible market changes its name or merges with another

eligible market, the successor market will be deemed to be an eligible market

unless the ACD and/or the Depositary determine that further due diligence is

required. In these circumstances, the prospectus will be updated with the

name of the new market at the next available opportunity.

Europe (Non-EEA States)

Croatia Zagreb Exchange

Switzerland SIX Swiss Exchange

Turkey Borsa Istanbul

Americas

Brazil BM&F Bovespa

Canada TSX (forms part of the TMX Group)

Mexico Bolsa Mexicana de Valores (Mexican StockExchange)

United States New York Stock Exchange

NYSE Mkt LLC

Boston Stock Exchange (BSE)

Chicago Stock Exchange (CHX)

The NASDAQ Stock Market

US OTC market regulated by FINRA

National Stock Exchange

NYSE Arca

NASDAQ OMX PHLX

The market in transferable securities issued by oron behalf of the Government of the United Statesof America conducted through those persons forthe time being recognised and supervised by theFederal Reserve Bank of New York and known asprimary dealers.

Africa

South Africa The JSE Securities Exchange

Far East

Australia Australian Securities Exchange (ASX)

China Shanghai Stock Exchange (B shares)

Shenzhen Stock Exchange (B shares)

Hong Kong Hong Kong Exchanges

Growth Global Enterprise Market (GEM)

India Bombay Stock Exchange Ltd

The National Stock Exchange of India

Indonesia Indonesia Stock Exchange (IDX)

Japan Tokyo Stock Exchange

Nagoya Stock Exchange

Sapporo Stock Exchange

JASDAQ

Korea Korea Exchange Incorporated (KRX)

Malaysia Bursa Malaysia Berhad

New Zealand New Zealand Stock Exchange

Philippines Philippine Stock Exchange (PSE)

Singapore Singapore Exchange (SGX)

Sri Lanka Colombo Stock Exchange

Taiwan Taiwan Stock Exchange

Gre Tai (Taiwan OTC)

Thailand The Stock Exchange of Thailand (SET)

Middle East

Israel Tel Aviv Stock Exchange (TASE)

For the purposes of “c” above, the derivatives markets listed below have

been deemed appropriate.

Europe (Non-EEA States)

Switzerland EUREX

Americas

Canada The Montreal Exchange

United States CME Group

Chicago Board Options Exchange (CBOE)

Africa

South Africa The JSE Securities Exchange

Far East

Australia Australian Securities Exchange (ASX)

Hong Kong Hong Kong Exchanges

Japan Osaka Securities Exchange

Korea Korea Exchange Incorporated (KRX)

New Zealand New Zealand Futures Exchange

Singapore Singapore Exchange (SGX)

Thailand Thailand Futures Exchange (TFEX)

APPENDIX 3 -

ELIGIBLE MARKETS

IF3/10152014/ENG/r01

52

4.1 M&G Corporate Bond Fund.


The Fund aims to achieve a higher total return (the combination of income

and growth of capital) from investment than would be obtainable in UK

government fixed interest securities (ie gilts) of similar maturities.

Investment Policy

The Fund invests mainly in sterling denominated corporate debt instruments.

The Fund’s exposure to corporate debt may be gained through the use of

derivatives. Any currency exposures within the Fund may be managed by

currency hedges into sterling. The Fund may also invest in other assets

including collective investment schemes, other transferable securities and

other debt instruments (including corporate debt and government and public

securities denominated in any currency), cash and near cash, deposits,

warrants, money market instruments and other derivative instruments.



Share classes/types in issue or availablefor issue*: Euro Class A – Gross Accumulation and Gross

Income

Euro Class B – Gross Accumulation

Euro Class C – Gross Accumulation and GrossIncome

U.S. Dollar Class A – Gross Accumulation andGross Income

U.S. Dollar Class C – Gross Accumulation andGross Income

Swiss Franc Class A – Gross Accumulation

Swiss Franc Class C – Gross Accumulation

Investment minima (Euro Share Classes)

Lump sum initial investment Class A: €1,000

Class B: €1,000

Class C: €500,000

Lump sum subsequent investment Class A: €75

Class B: €250

Class C: €50,000

Lump sum holding Class A: €1,000

Class B: €1,000

Class C: €500,000

Regular saving (per month) Class A: €75

Class B: €75

Class C: n/a

Redemption Class A: €75

Class B: €150

Class C: €50,000

Investment minima (U.S. Dollar Share Classes)

Lump sum initial investment Class A: $1,000

Class C: $500,000

Lump sum subsequent investment Class A: $75

Class C: $50,000

Lump sum holding Class A: $1,000

Class C: $500,000

Regular saving (per month) Class A: n/a

Class C: n/a

Redemption Class A: $75

Class C: $50,000

Investment minima (Swiss Franc Share Classes)

Lump sum initial investment Class A: CHF1,000

Class C: CHF500,000

Lump sum subsequent investment Class A: CHF75

Class C: CHF50,000

Lump sum holding Class A: CHF1,000

Class C: CHF500,000


Class C: n/a

Redemption Class A: CHF75

Class C: CHF50,000

Charges and Expenses (Euro, U.S. Dollar and Swiss Franc

Share Classes)

Initial charge Class A: 3.25%

Class B: nil

Class C: 1.25%


Class B: 1%

Class C: n/a

Annual Management charge Class A: 1.25%

Class B: 1.5%

Class C: 0.5%


Class B: 0.15%

Class C: 0.15%
















above.

Investor Profile



sterling denominated corporate debt instruments over the long term. but who









APPENDIX 4 -


IF3/10152014/ENG/r01

53

4.2 M&G Emerging Markets Bond Fund.



growth of capital)

Investment Policy

The Fund invests mainly in debt instruments issued by emerging market

borrowers, including government, government agency and corporate debt.

There are no restrictions on the currencies to which the Fund may be

exposed. Derivatives may be used for investment purposes as well as for

efficient portfolio management. The Fund may also invest in collective

investment schemes, other transferable securities (including other debt

instruments), cash and near cash, deposits, warrants and money market

instruments. M&G has the discretion to identify the countries that it considers

to qualify as emerging markets although these will typically be those that the

IMF or World Bank define as emerging or developing economies.



Share classes/types in issue or available Euro Class A – Gross Accumulation and Grossfor issue*: Income

Euro Class A-H (hedged) – Gross Accumulationand Gross Income



Euro C-H (hedged) – Gross Accumulation andGross Income


U.S. Dollar Class A-H (hedged) – GrossAccumulation and Gross Income


U.S. Dollar Class C-H (hedged) – GrossAccumulation and Gross Income


Swiss Franc Class A-H (hedged) – GrossAccumulation


Swiss Franc Class C-H (hedged) – GrossAccumulation



Class A-H: €1,000

Class B: €1,000

Class C: €500,000

Class C-H: €500,000


Class A-H: €75

Class B: €75

Class C: €50,000

Class C-H: €50,000


Class A-H: €1,000

Class B: €1,000

Class C: €500,000

Class C-H: €500,000


Class A-H: n/a

Class B: n/a

Class C: n/a

Class C-H: n/a


Class A-H: €75

Class B: €75

Class C: €50,000

Class C-H: €50,000



Class A-H: CHF1,000

Class C: CHF500,000

Class C-H: CHF500,000


Class A-H: CHF75

Class C: CHF50,000



Class A-H: CHF1,000

Class C: CHF500,000



Class A-H: n/a

Class C: n/a

Class C-H: n/a


Class A-H: CHF75

Class C: CHF50,000




Class A-H: $1,000

Class C: $500,000

Class C-H: $500,000


Class A-H: $75

Class C: $50,000

Class C-H: $500,000


Class A-H: $1,000

Class C: $500,000

Class C-H: $500,000


Class A-H: n/a

Class C: n/a

Class C-H: n/a


Class A-H: $75

Class C: $50,000

Class C-H: $50,000

APPENDIX 4 -


IF3/10152014/ENG/r01

54


Share Classes)


Class A-H: 4.00%

Class B: 1.25%

Class C: 1.25%

Class C-H: 1.25%

Redemption charge Class A: n/aClass A-H: n/a

Class B: n/a

Class C: n/a

Class C-H: n/a


Class A-H: 1.25%

Class B: 1.75%

Class C: 0.75%

Class C-H: 0.75%


Class A-H: 0.15%

Class B: 0.15%

Class C: 0.15%

Class C-H: 0.15%





Class C-H: 0.01% to 0.055%













above.

Investor Profile


combination of income and growth of capital from a portfolio of mainly debt

instruments issued by emerging market borrowers over the long term, but

who appreciate that their capital will be at risk and that the value of their








APPENDIX 4 -


IF3/10152014/ENG/r01

55

4.3 M&G European Corporate Bond Fund.



growth of capital) while generating a higher level of income than that from

European government bonds of similar maturities.

Investment Policy

The Fund invests mainly in investment grade corporate bonds denominated

in any European currency. The Fund may also invest in high yield corporate

bonds, government and public securities denominated in any European

currency. The Fund’s exposure to bonds, government and other public

securities may be gained through the use of derivatives. The Fund may also

invest in other assets, including collective investment schemes, other

transferable securities, cash and near cash, deposits, warrants, money

market instruments and other derivative instruments which may be

denominated in any major global currency. Any non-European currency

exposures within the Fund may be managed by currency hedges in

European currencies.




Income



U.S Dollar Class A – Gross Accumulation andGross Income

U.S Dollar Class A-H (hedged) – GrossAccumulation and Gross Income

U.S Dollar Class C – Gross Accumulation andGross Income

U.S Dollar Class C-H (hedged) – GrossAccumulation and Gross Income







Class B: €1,000

Class C: €500,000


Class B: €250

Class C: €50,000


Class B: €1,000

Class C: €500,000


Class B: €75

Class C: n/a


Class B†: €150

Class C: €50,000



Class A-H: $1,000

Class C: $500,000

Class C-H: $500,000


Class A-H: $75

Class C: $50,000

Class C-H: $50,000


Class A-H: $1,000

Class C: $500,000

Class C-H: $500,000


Class A-H: n/a

Class C: n/a

Class C-H: n/a


Class A-H: $75

Class C: $50,000

Class C-H: $50,000



Class A-H: CHF1,000

Class C: CHF500,000



Class A-H: CHF75

Class C: CHF50,000



Class A-H: CHF1,000

Class C: CHF500,000



Class A-H: n/a

Class C: n/a

Class C-H: n/a


Class A-H: CHF75

Class C: CHF50,000


APPENDIX 4 -


IF3/10152014/ENG/r01

56


Share Classes)


Class A-H: 3.25%

Class B†: nil

Class C: 1.25%

Class C-H: 1.25%


Class A-H: n/a

Class B†: 1%

Class C: n/a

Class C-H: n/a


Class A-H: 1%

Class B†: 1.5%

Class C: 0.5%

Class C-H: 0.5%


Class A-H: 0.15%

Class B: 0.15%

Class C: 0.15%

Class C-H: 0.15%




ACD’s share class hedging fee Class A-H: 0.01 to 0.055%

Class C-H: 0.01% to 0.055%












further detail and an explanation of the terms used, please see section

29 above.

Investor Profile



investment grade corporate bonds denominated in any European currency

over the long term, but who appreciate that their capital will be at risk and that

the value of their investment and any derived income may fall as well as rise.



Launch date: 13 January 2003




APPENDIX 4 -


IF3/10152014/ENG/r01

57

4.4 M&G European High Yield Bond Fund.



growth of capital) while generating a high level of income.

Investment Policy

The Fund mainly invests in higher yielding debt instruments denominated in

any European currency and will normally be managed to give investors

exposure to European currencies. The Fund’s exposure to higher yielding

debt instruments may be gained through the use of derivatives. The Fund

may also invest in other assets including collective investment schemes,

government and public securities and other transferable securities, cash and

near cash, deposits, warrants, money market instruments and other

derivative instruments which may be denominated in any major global

currency. Any non-European currency exposures within the Fund may be

managed by currency hedges in European currencies.



Share classes/types in issue or available Euro Class A – Gross Accumulation and Grossfor issue: Income




U.S. Dollar Class A-H (hedged) – GrossAccumulation and Gross Income


U.S. Dollar Class C-H (hedged) – GrossAccumulation and Gross Income





Investment minima (Euro Shares Classes)


Class B: €1,000

Class C: €500,000


Class B: €75

Class C: €50,000


Class B: €1,000

Class C: €500,000


Class B: n/a

Class C: n/a


Class B: €75

Class C: €50,000



Class A-H: $1,000

Class C: $500,000

Class C-H: $500,000


Class A-H: $75

Class C: $50,000

Class C-H: $50,000


Class A-H: $1,000

Class C: $500,000

Class C-H: $500,000


Class A-H: n/a

Class C: n/a

Class C-H: n/a


Class A-H: $75

Class C: $50,000

Class C-H: $50,000



Class A-H: CHF1,000

Class C: CHF500,000



Class A-H: CHF75

Class C: CHF50,000



Class A-H: CHF1,000

Class C: CHF500,000



Class A-H: n/a

Class C: n/a

Class C-H: n/a


Class A-H: CHF75

Class C: CHF50,000


APPENDIX 4 -


IF3/10152014/ENG/r01

58


Share Classes)


Class A-H: 3.25%

Class B: 1.25%

Class C: 1.25%

Class C-H: 1.25%


Class A-H: 3.25%

Class B: n/a

Class C: n/a

Class C-H: n/a

Annual Management Charge Class A: 1.25% Class A-H: 1.25%

Class B: 1.75%

Class C: 0.75%

Class C-H: 0.75%


Class A-H: 0.15%

Class B: 0.15%

Class C: 0.15%

Class C-H: 0.15%





Class C-H: 0.01% to 0.055%













above.

Investor Profile


combination of income and growth of capital whilst generating a high level of

income from a portfolio of mainly higher yielding debt instruments

denominated in any European currency over the long term, but who









APPENDIX 4 -


IF3/10152014/ENG/r01

59

4.5 M&G Global Government Bond Fund.



growth of capital).

Investment Policy

The portfolio will mainly consist of investment grade government debt

securities, including government guaranteed debt securities, and will be

invested on a global basis. The Fund’s exposure to investment grade

government debt may be gained through the use of derivatives. The Fund

may also invest in other government and public securities, collective

investment schemes, other transferable securities, other debt instruments,

cash and near cash, deposits, warrants, money market instruments and

other derivative instruments. The Fund may use derivatives for Efficient

Portfolio Management purposes.




Income


U.S Dollar Class A – Gross Accumulation andGross Income

U.S Dollar Class C – Gross Accumulation andGross IncomeSwiss Franc Class A – GrossAccumulation


Investment minima (Euro Shares Classes)


Class C: €500,000


Class C: €50,000


Class C: €500,000


Class C: €50,000



Class C: $500,000


Class C: $50,000


Class C: $500,000


Class C: $50,000



Class C: CHF500,000


Class C: CHF50,000


Class C: CHF500,000


Class C: n/a


Class C: CHF50,000

Charges and Expenses (Euro, U.S. Dollar, and Swiss Franc

Share Classes)


Class C: 1.25%


Class C: n/a


Class C: 0.50%


Class C: 0.15%
















above.

Investor Profile



investment grade government debt securities, including government

guaranteed debt securities, over the long term, but who appreciate that their






Valuation Currency: U.S. Dollar



The Fund was created as a result of the conversion of The M&G

International Sovereign Bond Fund unit trust which had been launched on 4

October 1999. The last significant change to the Fund’s investment objective

and/or investment policy occurred on 1 July 2014, when it was also

renamed.

APPENDIX 4 -


IF3/10152014/ENG/r01

60

4.6 M&G Recovery Fund.


The Fund predominantly invests in a diversified range of securities issued by

companies which are out of favour, in difficulty or whose future prospects are

not fully recognised by the market. The sole aim of the Fund is capital

growth. There is no particular income yield target.



Share classes/types in issue or availablefor issue*: Euro Class A – Net Accumulation and Net

Income

Euro Class B – Net Accumulation and NetIncome

Euro Class C – Net Accumulation and NetIncome

U.S. Dollar Class A – Net Accumulation and NetIncome

U.S. Dollar Class C – Net Accumulation and NetIncome

Swiss Franc Class A – Net Accumulation andNet Income

Swiss Franc Class C – Net Accumulation and NetIncome



Class B: €1,000

Class C: €500,000


Class B: €250

Class C: €50,000


Class B: €1,000

Class C: €500,000


Class B: €75

Class C: n/a


Class B: €150

Class C: €50,000



Class C: $500,000


Class C: $50,000


Class C: $500,000


Class C: n/a


Class C: $50,000



Class C: CHF500,000


Class C: CHF50,000


Class C: CHF500,000


Class C: n/a


Class C: CHF50,000


Share Classes)


Class B: nil

Class C: 3.25%


Class B: 1%

Class C: n/a


Class B: 1.75%

Class C: 0.75%


Class B: 0.15%

Class C: 0.15%
















above.

Investor Profile


of capital from a portfolio of diversified securities issued by companies which

are out of favour, in difficulty or whose future prospects are not fully

recognised by the market, over the long term, but who appreciate that their









Note to investors in France

The M&G Recovery Fund is eligible to participate in the savings plan in

France (PEA). The Fund is required, at all times, to invest at least 75% of its

net assets in securities which are eligible for the PEA.

APPENDIX 4 -


IF3/10152014/ENG/r01

61

APPENDIX 5 –


IF3/10152014/ENG/r01

M&G Corporate Bond Fund Bar Chart

12.1

0.8

-0.7

1.0

10.9

15.3

5.0

9.8

5.0 6.3

-4

0

4

8

12

16

20

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14

Source: Morningstar Inc, last 10 years, % return, bid to bid, net income reinvested, sterling Share Class A

M&G Corporate Bond Fund to end June each year

M&G Dividend Fund Bar Chart

19.7 17.5

16.0

-19.8 -18.3

19.2

24.0

-0.3

14.7

9.1

-30

-20

-10

0

10

20

30

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14


M&G Dividend Fund to end June each year

The cumulative performance over the last 10 years is 86.2% The cumulative performance over the last 10 years is 97.5%

M&G Emerging Markets Bond Fund Bar Chart

16.8

1.4 0.7

6.6

18.9

23.7

3.0 5.0 5.5

-0.8

-10

-5

0

5

10

15

20

25

30

35

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14

Source: Morningstar Inc, last 10 years, % return, bid to bid, net income reinvested, sterling Share Class X

M&G Emerging Markets Bond Fund to end June each year

M&G European High Yield Bond Fund Bar Chart

10.3

7.6

2.2

9.1

-1.8

18.1

22.0

-10.2

20.6

6.8

-15

-10

-5

0

5

10

15

20

25

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14

Source: Morningstar Inc, last 10 years, % return, bid to bid, net income reinvested, sterling Share Class X

M&G European High Yield Bond Fund to end June each year

The cumulative performance over the last 10 years is 111.6%


M&G European Corporate Bond Fund Bar Chart

8.1

-0.5 -2.1

15.3

11.6

7.8

13.7

-6.6

13.8

1.0

-10

-5

0

5

10

15

20

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14

Source: Morningstar Inc, years since launch, % return, bid to bid, net income reinvested, sterling Share Class A

M&G European Corporate Bond Fund to end June each year

The cumulative performance since launch is 78.1%

M&G Fund of Investment Trust Shares Bar Chart

23.4 20.4 21.1

-13.3

-24.7

19.9 21.5

-9.0

21.7

12.0

-45

-35

-25

-15

-5

5

15

25

35

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14


M&G Fund of Investment Trust Shares to end June each year


Past performance is not a guide to future performance.

62

APPENDIX 5 –


IF3/10152014/ENG/r01

M&G Global Government Bond Fund Bar Chart

7.0

-3.8

-7.0

16.4

28.0

15.2

4.9

9.4

-1.0

-10.2 -15

-5

5

15

25

35

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14


M&G Global Government Bond Fund to end June each year

M&G Recovery Fund Bar Chart

18.9

26.4 25.1

-7.3

-15.2

19.2

26.9

-4.8

10.4 7.4

-35

-25

-15

-5

5

15

25

35

45

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14


M&G Recovery Fund to end June each year

M&G Smaller Companies Fund Bar Chart

27.3 27.9 27.5

-13.9

-23.9

24.1

37.5

-4.7

31.6

11.4

-40

-30

-20

-10

0

10

20

30

40

50

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14


M&G Smaller Companies Fund to end June each year

The cumulative performance over the last 10 years is 67.5% The cumulative performance over the last 10 years is 152.2%



63

APPENDIX 5a –

EURO PERFORMANCE BAR CHARTS

IF3/10152014/ENG/r01

M&G Corporate Bond Fund Bar Chart

16.5

-2.3

2.0

-14.6

3.0

20.0

-5.3

22.9

-1.5

13.5

-30

-20

-10

0

10

20

30

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14

Source: Morningstar Inc, last 10 years, % return, bid to bid, net income reinvested, euro Share Class A

M&G Corporate Bond Fund to end June each year

M&G European Corporate Bond Fund Bar Chart

8.8

-3.7

0.9

-2.0

3.7

12.4

2.7

4.8

6.9

8.1

-5

0

5

10

15

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14

Source: Morningstar Inc, years since launch, % return, bid to bid, net income reinvested, euro Share Class A


The cumulative performance over the last 10 years is 59.4% The cumulative performance since launch is 50.1%

M&G European High Yield Bond Fund Bar Chart

21.8

4.3 5.1

-7.3 -8.3

23.5

10.2

0.7

13.3 14.3

-15

-5

5

15

25

35

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14


M&G European High Yield Bond Fund to end June each year


M&G Recovery Fund Bar Chart

18.1

22.6

28.7

-21.2 -21.2

24.3

14.7

6.8 3.7

15.0

-30

-20

-10

0

10

20

30

40

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14


M&G Recovery Fund to end June each year



64

APPENDIX 5b –

U.S. DOLLAR PERFORMANCE BAR CHARTS

IF3/10152014/ENG/r01

M&G Emerging Markets Bond Fund Bar Chart (USD

Share Class A)

17.0

5.9

10.4

6.8

-0.5

13.4

11.4

3.4 3.1

11.1

-10

0

10

20

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14

Source: Morningstar Inc, last 10 years, % return, bid to bid, net income reinvested, USD Share Class A

M&G European Emerging Markets Bond Fund to end June each year



65

APPENDIX 5c -

SWISS FRANC PERFORMANCE BAR CHARTS

IF3/10152014/ENG/r01

European Corporate Bond Fund Bar Chart (Swiss

Franc Class A-H)

7.7

0

10

Jun 04-Jun 05

Jun 05-Jun 06

Jun 06-Jun 07

Jun 07-Jun 08

Jun 08-Jun 09

Jun 09-Jun 10

Jun 10-Jun 11

Jun 11-Jun 12

Jun 12-Jun 13

Jun 13-Jun 14

Source: Morningstar Inc, last 10 years, % return, bid to bid, net income reinvested, Swiss Share Class A-H


The cumulative performance since launch is 9.90%


66

The Company and Head Office:


Laurence Pountney Hill

London EC4R 0HH

Authorised Corporate Director:

M&G Securities Limited


London EC4R 0HH

Investment Managers:

M&G Investment Management Limited


London EC4R 0HH

Custodian:

State Street Bank and Trust Company

20 Churchill Place

Canary Wharf

London

E14 5HJ

Depositary:

National Westminster Bank plc

Trustee & Depositary Services

Younger Building

1st Floor

3 Redheughs Avenue

Edinburgh

EH12 9RH

Registrar:

International Financial Data Services (UK) Limited

PO Box 9039

Chelmsford

CM99 2WA

Auditor:

Ernst & Young LLP

10 George Street

Edinburgh

EH2 2DZ

Directory


IF3/10152014/ENG/r01

51890

M&G Securities Limited is authorised and regulated by the Financial Conduct Authority and provides investment products. The company’s registered office is Laurence

Pountney Hill, London EC4R 0HH. Registered in England number 90776.

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